FundersClub is bringing direct access to Y Combinator startups out from behind closed doors.
The online venture capital firm has raised a $1.1 million fund as part of its new “Accelerate Series” that will support startups from Y Combinator’s Winter 2013 batch.
FundersClub is an investing platform that presents accredited investors with a curated selection of investment opportunities. Featured startups have a profile on the site with a fundraising goal. Members of the community — individuals with an annual salary of over $200,000 or net worth of over $1 million — can make investments in the companies that appeal to them. FundersClub then bundles the money together into one fund and gives it to the startup as one entity on the cap table, under the FundersClub name.
Now, with one “check,” members can invest in 11 promising companies.
Y Combinator is generally considered to be the most elite accelerator program in Silicon Valley. Its demo day is an invite-only event that gives selected investors direct access to startups in its portfolio. FundersClub itself participated in Y Combinator, and its first round of featured startups were all fellow YC companies. With the Accelerate Series, FundersClub is taking more of a Start Fund style approach.
StartFund was formed by Russian billionaire Yuri Milner and SV Angel legend Ron Conway in 2011 to put $150,000 into all Y Combinator companies. Andreessen Horowitz and General Catalyst were also contributors, and this money was one of the perks of the program. However as the program grew and valuations shot up, the money was difficult to manage and YC decided to do a little reshuffling. It created its own fund called YC VC where startups receive $80,000, and later announced that it would cut down class size from 84 in summer 2012 to fewer than 50 in winter 2013.
While it won’t invest in every startup in the class, the Accelerate Series funds will give any investor the chance to invest in a good portion of the YC portfolio, rather than just billionaires and hallowed VCs. It is the latest step in FundersClub’s goal to democratize venture capital.
“We are dedicated to evening the VC playing field which is traditionally insider’s only for certain investors and certain companies,” said cofounder and CEO Alex Mittal in an interview with VentureBeat. “FundersClub is opening access to quality startups to any accredited investor, even those without connections. It is online, more inclusive, and more democratic.”
FundersClub carries out the due diligence process for investors and acts as an intermediary between angel investors and the companies. The SEC recognized it as the first ever online VC in March and the National Venture Capital Association admitted FundersClub into its ranks, which was validation that its approach does not violate SEC regulations. Regardless of what happens with the JOBS Act, FundersClub’s activities are above-board. To date, it has invested more than $5 million in 25 companies and has more than 6,000 accredited investor members.
The YC startups that will get FundersClub investment are CircuitLab, Goldbely, Medisas, Meldium, Padlet, Prizeo, Screenhero, Strikingly, Teespring, and Thalmic Labs.
FundersClub closed a $6 million seed round last year from an impressive roster of investors. It is based in San Francisco, Calif.
Photo Credit: FundersClub