Crowdfunding for startups is starting to attract more professional investment managers.
LaunchAngels, a Boston-based fund for individual investors, is seeking its first $1 million pool of cash to invest in early stage and growing companies.
The company is a spinoff of Big Idea Group, a Bedford, NH-based business consulting firm. It’s being headed by CEO Shereen Shermak, who previously worked at finance startups BuysideFX and Currensee.
LaunchAngels’ pitch goes like this: With the loosening of federal rules about publicly soliciting investment, there’s suddenly a flood of startups seeking financing online through websites like AngelList, MicroVentures, and FundersClub.
Maybe too many. LaunchAngels promises to narrow that field by keeping tabs on the companies seeking money and selecting its favorites.
Most of the cash is intended for early stage companies, but LaunchAngels also says it will reserve about 10 percent of its capital for investments in operating companies. One example is a potential deal LaunchAngels is advertising on its website to buy some shares of Twitter before the company’s IPO, through MicroVentures.
LaunchAngels says it plans to raise several “mini-venture funds” of $500,000-$2 million, with about 10 investors in each. Shermak tells the Boston Business Journal that she hopes to close an initial $1 million fund by year’s end, with a subsequent run of new $1 million funds raised each quarter.
The firm would make money by claiming 10 percent of profits after returning capital and fees. It charges each investor $1,200 in annual mangement fees for the life of each fund—typically 10 years—along with $250 per company in annual paperwork costs. Some of the individual deals also have their own costs beyond what LaunchAngels would charge.
LaunchAngels’ bet on playing the middleman is just one of several new approaches to early stage financing that we’ve seen since federal rules were changed, allowing more companies to solicit investors online.
In Austin, Capital Factory founder Joshua Baer began accepting investors for his own AngelList syndicate. So did the Boulder-based Foundry Group, which plans to invest $2.5 million in AngelList companies.
