With exits in the billions, seed rounds in the millions, and numerous IPOs on the horizon, you’d think that the capital investment market would be happy, healthy and thriving. In some ways, where public offerings and early-stage investment is concerned, that’s absolutely true. But for growth companies across the world looking to pick up growth-stage capital, the process becomes much more opaque.
That’s why CyndX, led by former AOL exec Jay Kirsch and Jim McVeigh, is launching into private beta.
The private placements sector currently looks a bit like this: A growth-stage company like Spotify will be looking to close a C or D round, and they will call up a financial institution to help with the deal. That financial institution will then do outreach to as many institutional investors as possible, usually whatever’s available in a rolodex somewhere. On average, that’s around 50 investors.
With CyndX, the plan is to allow any growth-stage company to expand their private placement offering to as many potential investors as possible. Using Crunchbase and LinkedIn APIs, CyndX analyzes the deal and then matches that company with the best suited investors for that deal.
The platform doesn’t necessarily cut out all financial institutions, but it gives the company more control over who is investing and what the term sheet looks like.
As investors browse the deal, they are invited to fill out one stage of the term sheet at a time, which can be reviewed by the company throughout the entire process. Not only does this give the company the best possible shot at a good match with an investor, but it gives investors the opportunity to make deals that they never would have known about otherwise.
CyndX will take a small transaction fee, that will be split up between the financial institution running the deal and the platform.
This isn’t the first intended shake-up of the investment arena we’ve seen recently. Alphaworks, a new leg out of the betaworks house, is a platform built to crowd-fund the exchange of early-stage equity and capital.
With CyndX, a similar offering is being made to later-stage companies. And it’s not just about tech. Kirsch wants any company, no matter the industry, to get a profile on CyndX before raising another round.