Florida-based Seedfunders, a firm that invests in early-stage startups, is opening the floor to accredited investors who may be interested in participating in the firm’s deals.
Seedfunders has officially launched the Seedfunders Associate Member Network, where investors outside of Seedfunders can view opportunities in deals and easily ink documents for investments and wire the funds.
“When I started Florida Funders, I used this concept and it was hugely successful, but it was hard because no one understood it at the time and everything had to be done manually piecing the software, taking checks manually, even having to overnight them,” said David Chitester, founder of the local venture fund Florida Funders – and Seedfunders.
He said at the time, only two other venture capital firms he knew of were utilizing the concept – California-based AngelList and the FundersClub.
“I’ve been running Seedfunders for five years. At first, I decided to not launch that concept because of the difficulty, but now the process will be completely automated,” he explained. “We can bring in lots of investors without the manual work.”
Once someone joins the network, they are informed about investment opportunities, which on most deals will require a minimum funding participation of $5,000 if they choose to invest. Seedfunders works with pre-revenue businesses, and on average invests roughly $150,000 in a startup.
The process will be automated through the Sydecar system, which is a private platform rather than a public investing marketplace; it also handles the back-office operations for venture investors.
Interested investors will have access to the documents related to the company and the deal, K-1 documents and more. Sydecar collects signatures and financing information. The only manual work required will entail Chitester virtually approving the interested investor for a particular deal.
The deals include those from all of Seedfunders entities/offices in St. Petersburg, Miami and Orlando.
Equity members in any of the Seedfunders entities do not also have to join the Associate Member Network, which there is no cost to join and no membership fees.
The network is only open to accredited investors, which the U.S. Securities and Exchange Commission (SEC) defines as one who has made $200,000 per year for the past two years, or has earned $300,000 with their spouse, or if they have a net worth of more than $1 million, not counting the value of their permanent residences.
“The goal is to sign up as many as we can. Today, 97% of accredited investors do not invest in these private deals. They either don’t know about them, think it’s too risky or have other reasons. We want to make it easy for them to get involved in the local ecosystem,” Chitester said.
Seedfunders aims to fund 12 Florida companies this year. In the future, the group may consider increasing its deal flow outside of the state, depending on its investor network and activity.
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