Betaworks is announcing today for the first time that we’ll be syndicating seed investments as part of our larger Openbeta initiative. While this announcement comes on an important day for crowdfunding, with the lifting of the ban on general solicitation, it’s something we’ve been thinking about for a long time. We think that in the next few months, as the crowdfunding regulations are clarified, this new funding environment will be hugely positive for startups and how they approach raising capital. Unfortunately, because implementation of the laws is still underway, we can’t yet discuss the specific company we’re syndicating, but we’re excited to partner with AngelList to do it.
We’re beginning to syndicate seed investments for reasons both philosophical and structural — we believe it’s consistent with our open architecture at betaworks and it gives us an additional advantage as seed-stage angel investors. This is a new form of startup financing, it’s innovative and disruptive. And like most things we do at betaworks, this is a beta.
How did this come about? It started with a list of questions:
- How can we offer great companies the most efficient access to capital?
- Does the existing seed-stage financing system work the way it could? And what will the seed-stage angel / fund look like 6 months, 2 years, 10 years from now?
- Could users be more helpful to early-stage companies than venture investors are?
- Should early-stage Internet investment opportunities be limited to LPs and wealthy individuals?
- What would happen if we gradually opened up our investment doors to the world?
This is just a small sample of the questions we ask ourselves every day.
Earlier this year we started a project called Openbeta as the first step towards creating a more open ecosystem around betaworks and our community of users. We believe we’re better at what we do — building and operating companies — because we work with and have the support of a larger community of users and technologists. In a very short period of time, Openbeta has become a place where thousands of people can participate in the betaworks ecosystem — help us test the early products we build and invest in, join us for events at the betaworks studio, and today, for the first time, invest alongside us in the companies we fall in love with.
This new part of Openbeta is more than just a philosophical exercise. We believe crowdfunding strategies such as syndicates will help our startups. It will allow them to raise additional capital efficiently and shield them from the complexity of having lots of angel investors on their cap table (betaworks manages this for them as part of the AngelList Syndicate feature). We do not believe this type of capital replaces the seed fund partners and angel investors we already love working with (and who are very helpful to their startups), but we believe betaworks-led syndicates will add to and complement these folks nicely.
To invest in our syndicates, you must:
- Be a member of Openbeta, click here to sign up
- Be an accredited AngelList investor. (We hope that as crowdfunding regulations progress, we will be able to include a broader group, both accredited and non-accredited investors, but right now you must be accredited to participate.)
If you have any additional questions, you can reach out to me directly at email@example.com.
These new regulations combined with our announcement today marks a significant change for the technology industry, particularly for startups and venture capital. As usual, we’re happy to be smack in the middle of it and we hope you’ll join us in this journey.