Kiva is p2p-lending site that facilitates loans between lenders in wealthy countries and entrepreneurs in developing countries. Now a new startup aims to bring a simialr model to startups in the developed world but with an investment focus. The idea here is to fix the current inefficiencies of private seed funding for web and mobile companies, especially in markets outside of the hothouse that is Silicon Valley (i.e. Europe and Asia).
Grow VC is a new community funding model for technology startups. Here’s how it works: Grow VC will pool 75 per cent of membership fees into a community fund that gets invested back into ‘promising startups’ which are members of the platform. The fund is managed by Grow VC but all the investment decisions are left to members who determine how to invest their portion of the fund into other startup companies that they feel have the most potential. The most successful decision makers get financially rewarded when the community fund begins earning a return on investment. So, if you promote the best companies you make moola.
Joining Grow VC, and the basic features such as building a person profile, are free. Premium features come with subscriptions ranging from $20 to $140 per month, depending on how much money the startup company is seeking or how much the investor is looking to invest. For unlimited service investments, the monthly subscription fee is $90 per month. The fund is aimed at startups that need $10,000 to $1 million USD.
The service claims to include the tools needed for building a startup from the ground up, to getting funding at the seed level. Yes, that’s quite a claim, but it’ll takle a few startups to kick the tyres to see if this platform holds up. There are other playing in this area, such as the recent Sprouter.com but Grow VC is possibly the most ambitious I’ve seen to date.
The list of features it has includes: introducing startups to investors, experts and other entrepreneurs; helping them discover common interests and a members leaderboard. The platform is patent-pending.
It’s now been in public beta for the last few months and has reached 700 registered users from within the startup and investment communities.
Grow VC cofounder and CEO Valto Loikkanen says its model gets startups acquainted “with the entire investment process… our success is dependent on the success of other startups, investors and experts in ourcommunity.”
Cofounder and chairman Jouko Ahvenainen rightly points out that “Early phase funding requires new solutions. VC’s are moving their focus to more mature companies, and LP’s are decreasing investments in VC funds. Entrepreneurs want to have more competition and transparency in the funding market, and business angels require better tools to find good startups and for easier dealmaking.”
That’s fair comment, that is exactly what is going on right now. The question is is whether Grow VC is the right model. I guess we’re about to find out.