When a young Boston entrepreneur sought half-a-million dollars to launch his startup last fall, he turned his back on today’s usual tactics, such as selling equity stakes or issuing convertible notes.

BrokerDealer.com global database can link you to angel investors and qualified brokerdealers

Instead, Vinayak Ranade opted to use a largely untested way for entrepreneurs to raise funds known as a Simple Agreement for Future Equity.

The agreement provided investors in Drafted Inc., Mr. Ranade’s fledging, four-employee company, no equity shares, and the investors weren’t categorized as creditors.

Instead, the investors who bet more than $500,000 on Drafted got a warrant entitling them to shares in the company if and when it next raises investment capital, or is acquired, or has an IPO.

And if Drafted fails? Well, then the investors will get nothing.

Drafted is still developing its product, which enables users to refer friends to online job posters while it gathers a base of early users, said Mr. Ranade, who is its founder. He ruled out raising equity because he wanted to avoid the tricky task of setting a valuation for so nascent a company.

In addition, the 27-year-old was put off by the complexity of contracts and term sheets for deals to obtain funds by issuing convertible debt. “No matter how much I learned about convertible notes, I would never know as much about them as a seasoned investor,” he said.

The Simple Agreement for Future Equity is “a bit of a gimmick,” said Christopher Mirabile, the managing director of Launchpad Venture Group and chairman-elect of the Angel Capital Association. The deals look attractive to startup founders because they streamline the fundraising process at the earliest stages of building a new company. But “as an investor, you’re taking all the early risk without any upside.” He added that shifting more risk from entrepreneurs to investors is especially dangerous when soaring startup valuations are drawing a growing number of unsophisticated investors into the market.

In some ways, the new Simple Agreements for Future Equity are similar to convertible notes, which venture capitalists have used as bridge loans in later-stage startup financing deals since the mid-1990s, according to John Coyle, a professor at the University of North Carolina School of Law. “If you were running out of cash but were preparing for a Series B round, investors in your Series A round could loan you money,” using a convertible note, he said.

For the entire WSJ article, please click here

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BrokerDealer.com Launches Broker-Dealer Business Intelligence Portal for Global Bankers,

Qualified Investors and Entrepreneurs Raising Capital

New York, NY—May 28–Broker Dealer LLC, a provider of financial industry corporate intelligence and qualified investor databases, announced today the launch of a new, broker dealer web-based portal that incorporates 100,000 broker dealer, investment banker and securities dealer profiles as well as upwards of 20,000 qualified investors extending across 35 major countries, including capital formation brokers and deal investors based in North America, EU, Eastern Europe, China, Pacific Rim, the Middle East and Africa.

Apart from detailed lead generation and decision-maker metadata, the company’s platform incorporates a range of social media applications, including a “deal room” forum that enable capital-seeking business enterprises to share their business plans with professional deal-sourcing bankers and private funding sources that include qualified angel investors, hedge fund managers, private equity and venture capital firms and family offices seeking investment opportunities. The firm’s investor database is available for free and is accessible via http://BrokerDealer.com.

“Brokerdealer.com could be the right domain for this new player in the business intelligence space when considering the evolution of the JOBS Act in the U.S., the global embracement of crowd-funding in advance of traditional investment bank capital-raising techniques and the depth of global contact information available within the brokerdealer.com database. The social networking function within its subscriber-based platform is compelling, and it’s advertising-free.”

Brokerdealer.com was designed to help connect companies seeking broker dealers, funding, underwriting, or lead manager assistance for debt and equity offerings. The platform was created out of the need to give entrepreneurs, investors and data providers the ability to connect with one another. The broker dealer databases found on brokerdealer.com includes information such as broker dealer’s name, address, phone, URL/emails, and most important, a description of what the broker-dealer actually performs. If a company is seeking to raise capital for a real estate project the user will be able to filter the broker dealer databases – on a global scale – and reach out.

Brokerdealer.com anticipates adding 45 additional securities dealer and broker directories, giving network members of brokerdealer.com upwards of 75 of the world’s most popular broker dealer lists.

For Additional Info:

Email: brokerdealer@brokerdealer.com

Twitter: @broker_dealer

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What are Angel Investors?

An angel investor is an entrepreneur much like yourself. They have had the previous experience of owning and operating a successful business until they became a very high net-worth person. They are ready to invest their own funds into a successful startup company to help you build and grow your operations.

Since they understand the high risks of investing in early-stage startups, angel investors seek companies that hold a certain criteria. You, as the business owner, have to be ready to build up the business until the time comes to exit through a merger or sale. This process is how the angel investor gets a return on their investment.

In the past, many angel investors would try to stick with companies close to home, but the advent of the Internet has made it easier to invest globally. Websites like BrokerDealer.com are part of this revolution. Ideally, angel investors are looking for a startup company that promises high returns, scalability to its operations, strong management, and a unique product or service that will attract a large market for an extended period of time.

What Is the Difference Between an Angel Investor and a Venture Capitalist?

You may be wondering what the difference is between an angel investor and a venture capitalist. Both are entrepreneurs who invest in startups that promise high returns. Yet there are some major differences between the two of them.

While an angel investor will give your business the seed money at the very early stages of your operations, venture capitalists usually wait until the startup has a bit more groundwork underneath it and is beginning to produce revenue. Angel investors also often invest using their own funds. Venture capitalists, on the other hand, will use other investment sources such as foundations, pension funds, and insurance companies.

Another major difference will be the amount of invested money given to you. Angel investors normally stick with investing smaller amounts ranging up to $100,000. A venture capitalist may invest $2 million or more into your startup. Some angel investors may work in entrepreneurial organizations called angel groups that will invest from $200,000 up to $2 million in a startup based on the size of the group.

Understanding angel investors and how they operate can help you decide if they are the ideal investment partner for your startup. If you are running a fledgling startup and you don’t mind giving up some ownership of their business, have a high-demand product or service, expect large revenues in the coming years, and have an exit plan in place; then seeking an angel investor may be the answer to your company’s financial needs.

Sources: http://www.forbes.com/sites/tanyaprive/2014/03/11/the-most-common-question-that-new-angel-investors-ask-2/

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