After record investment in 2021, the pullback in funding by venture capitalists was more pronounced for later-stage companies than it was for earlier-stage companies. According to the State of Venture report from CB Insights for the third quarter of this year, there were 56 per cent fewer investments from top three investors compared to the previous quarter. The report also shows a 36 per cent decline in European funding.
With total funding declining 34 per cent quarter-on-quarter and the number of unicorns declining by 71 per cent during Q3 2022, the contraction is real. However, as VCs decided to take a step back, angels came to the rescue. All reports indicate that angel investors showed their resilience to the market slowdown.
As the only investor class to not see a decline in median deal size during the third quarter of 2022, angels are going strong. In order to aid them with their investments, Vauban from Carta has built a product tailor-made for angel investors.
An SPV solution for angel investors in Europe
Vauban, a London-headquartered firm, has made its name by making it easy for people to pool and deploy capital in private companies. With valuations becoming more reasonable and VCs shying away due to the economic downturn, there is now an opening for angel investors to diversify & de-risk their portfolio by pooling capital into later rounds. In order to support these angel syndicates, Vauban has introduced a new SPV (special purpose vehicle) specifically designed to support angel investors.
Called Atom, Vauban describes it as the ‘most cost-effective vehicle for deals under $200,000’. It is essentially an invitation to all angels, syndicates, hobbyists, or passion investors to join the Vauban from Carta platform to pool their capital and support great startups.
The company explains that Atom was created to offer a cost effective SPV solution for deal sizes under $200,000. “An increasing number of our customers were seeking to do deals of $75K or $100K so we knew we had to find a solution”. “For $2,000 + 2% of the amount raised, you can set up an Atom SPV on the Vauban platform,” the company announced in its blog post.
For that price point, Vauban includes everything you need to run your investment syndicate: from legal documentation and banking, investor KYC and onboarding, all the way through lifetime administration of the deal.
Access to equity for anyone
With Atom, Vauban is creating an opportunity for anyone to gain access to equity and begin their journey into venture capital.
The SPV also accommodates more informal investors like friends and family of founders, hobbyists, or angel investors just starting their VC investing. These are the folks filling the gaps left by VCs, representing over 50 per cent of early stage funding.
As an increasing number of UK and EU tech operators try their hands at angel investing, Vauban says there is a sizable appetite from angel investors to reproduce the returns seen after the 2008 downturn. Downturns offer a great opportunity to enter the market for those brave enough: deals are less competitive and valuations deflated. It is no coincidence that some of the largest successes of today, including Slack, Uber, and Microsoft, were founded during recessions.
Backed by Carta, the largest fintech infrastructure company, Vauban sees Atom as the starting point for angel investors looking to get started and eventually grow to manage a billion dollar fund.
“Following our efforts to automate everything on the platform (we now hold the world record for the fastest end-to-end SPV process in 2h30!), we are excited to bring you our newest product, Atom,” says Ulric Musset, founder and co-CEO of Vauban.
Who can join Vauban’s Atom SPV?
Vauban describes Atom as the definitive solution for angels, smaller syndicates, hobbyists, passion investors, and professional investors on the first rung of the VC ladder. The platform allows anyone to set up an SPV on Vauban for $2,000 + 2 per cent of the amount raised.
Atom builds on the idea that the cost of vehicles required to enter the VC world need not be expensive.
With investing in startups becoming more and more accessible, Vauban removes the barriers for entry so that angel investors can easily invest into the founders and startups they care about. The vehicle is ideal for those who advise startups, want to support entrepreneurs in your local area, are an avid reader of startup news or come across deal flow through your network or day job.
If you are looking to become an angel investor, the next step is to get an allocation in the funding round. After that, you can set up the deal on Vauban and share with your personal network to start pooling capital. Your co-investors can access all the relevant information, view the pitch deck, and make their investment in a few clicks.
As the lead investor, you can set the minimum investment amount to make the deal accessible and you can elect to charge carry as an incentive for putting the deal together (you can think of it as a finder’s fee). In the background, Vauban handles the setup of the SPV, documents, compliance, KYC etc. to enable your investment.
Vauban has built a platform that handles all complexities of VC investing, allowing you to launch investments in a few clicks. They even hold the record for fastest end-to-end SPV process of two hours and 30 minutes.
You can launch your Atom SPV by clicking here.