in late 2020a group of Stanford University students came together to create Stanford 2020, An investment fund only to invest in the projects of their classmates. Given the school’s past of founding successful startup founders, it’s no surprise that it would find it difficult to raise $1.5 million for its first investment vehicle – Waitlist Not Listed.
Now, two years later, the captain of that club, Steve Moy It attempts to replicate this guide in the form of a venture-backed startup, individual entrepreneur. PIN, which stands for strength in numbers, recently raised a $5.6 million seed funding round led by Initialized Capital, with investments from GSR, NEA and Canaan.
PIN wants to repeat the Stanford 2020 story for other community projects. The company says it provides interested clubs with a back-office framework, legal and tax support, and has a platform where leaders can look for opportunities to raise capital, meet other members and manage portfolios. It makes money through SaaS fees, which Moi says she hopes will remain less than 2% of the club’s total assets under management.
“Anyone who has started an investment vehicle, whether it is an investment club for a traditional fund, knows how difficult it is because of all the management obligations out there to ensure that the fund is set up properly and compliantly,” Moy explained. “Community investment clubs are more challenging due to the number of investors (a club can typically have hundreds of members), which leads to more friction during the fundraising process and ongoing operations.”
The startup isn’t too far behind companies like AngelList, which breaks down the founder’s experience, and Republic, which tries to make it easier for anyone to invest in startups.
A newly funded startup all about helping people break into the world of venture capital investing and coveted places on the land table looks like 2020. During a downturn, the show looks a lot more risky. For example, as founders enter a period of uncertainty, the allure of having one investor may take precedence over a group of advisors with different ownership, Jay Kapoor of VSC Ventures told TechCrunch last week. “The problem was with those party tours when it was time for someone to come forward and really support the company, they weren’t there,” Kapoor said.
Founders always want to protect their shares, but in the event of market instability, can the investment club win deals? PIN is working on various products that will create an incentive for club members to support the founders beyond the capital. Like, recruitment reward system.
Moy explains how recruiting founders can submit a job description that they promote to all members of their community club, which they will then receive through the PIN platform. Each action is tied to a specific reward, so if a member refers to someone who has been hired, they can get a cash prize or a spot on the leaderboard identifying them as someone who goes above and beyond to help the startup.
Product developments are still a work in progress, but largely with the aim of circumventing some of the party-touring issues. Moy added that the majority of people at Stanford 2020 were first-time checkwriters, which means their patronage and personal connection to the investment is “much higher and stronger than the party’s public round, arguably,” where an investor may have hundreds of startups.
It’s not a property that she or the startup can rely on indefinitely.
“The unfortunate timing for us right now is that we are benefiting a lot from the interest of traditional groups and unsurprising people like other schools, early stage tech companies, accelerators and [those] Who would want to use this product anyway,” Moy said. “It’s a much bigger uphill battle to get more non-traditional investors — something we care about… [but] Take a little back seat.”
She added, “If you’re really less familiar with how technology works and you start investing while you’re in this downturn, you get affected and you lose your job and you have less income to invest. Naturally, that becomes less of a priority…so it was frustrating for me personally.”
While market dynamics have affected PIN’s ability to reach a diverse group of early adopters, Moi is optimistic about the future. She attributed the increasing mental engagement around DAOs (Decentralized Autonomous Organization) as part of the reason why investment clubs are more interested these days. DAOs are centered around frameworks for collective decision making, a concept that fintech and other crypto companies can easily bring to a world like investing. only this week, OrangeDAO – which was created to bring together 1,000 YC alumni in one place to invest in startups together – has raised $80 million. earlier this year, Tribevest has made millions for a collaborative investment vehicle.
“When [TechCrunch] An article came out from Stanford 2020, co-founder of mine and I thought about doing this as a full time company, and in fact one of the main reasons we didn’t do it at the time was because we were convinced that Stanford’s dismissal might be a corner issue because of the fair criticism he gave Some readers,” about franchising.
“What changed this division for me was talking to over 100 groups… and realizing that’s not quite the case,” she said. “Now that I’m a founder, I realize that all startups have very different needs… All of these groups benefit from having community clubs of all kinds at the cover table because of the expertise they need.”