Dutch angel community Leapfunder aims to help startups to find early-stage financing. Started over four years ago, the startup consists of founders with a decade of experience in early-stage investing.
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Some key takeaways:
- Leapfunder sees itself as an angel community, not a crowdfunding platform
- Fees for startups that are fundraising are around 5.5% commission, which usually is as much as a lawyer would cost
- ‘Official talks’ are in place to launch a Leapfunder backed VC-fund
- But Leapfunder will not launch a VC fund of its own, though
- Next step for Leapfunder is setting up a presence in the Nordics.
Watch the full video below or a transcript editing for length and clarity below the video.
Silicon Canals (SC): How do you describe your company Leapfunder?
Tienko Rasker (TR): Leapfunder was co-founded by a group angel investors, and the philosophy behind the company is to standardize their contracts. In addition to it, we want angel investing to go digital, where transactions can be done online at lower cost from a smartphone on a sunny afternoon.
SC: What’s the difference between having an angel community and a crowdfunding platform?
TR: To be specific, traditional angel investors invest in thousands of companies with full knowledge about it on how the companies work and while having a direct impact on management including involving taking big decisions. So, we do the same work here as well. We know the person and pick them individually, whether you let them into your data room at all.
Because the data room is full of highly confidential stuff, the admission is limited. We just provide all the information that they would need in a central place so that it’s possible to do traditional angel investment included in the relationship building. Having said that, contracting with 10 to 15 people is not easy in general, but we standardized it and put the data up front, where the transaction execution is easier.
SC: Does a startup then get that money all at once or per investment?
TR: In this case, investors need to click on the ‘Pay’ button, upon which various legal processes will start in the background. In about a week or two, the startup will receive the cash. It will be held in a safe place away from the startup until enough money has been collected.
SC: For example, I just founded my startup and need some funding. If I come to you, what kind of typical rounds are we talking about?
TR: The typical round consists of 15 investors per round. Rounds start from €30 to 50,000 and they can go up to €1 to 2 million.
SC: How do you make money? Do you charge money with the investor or with the startups?
TR: First of all, we’d like to say that our charges are as expensive as a lawyer which is around €10,000 to €15,000 per round. The fee for the first €3000 is 5.5% in the Netherlands.
SC: In addition to online interaction, you organize roundtable sessions as well. Any specific reasons?
TR: We believe the face-to-face component is very important in the angel investing. In general, angel investors like to meet the entrepreneur in person formally and informally. So instead of angel investors going to a lot of companies, organize a monthly regular meeting where everybody comes together in one place.
SC: Are startups are a bit scared of investors?
TR: They are until they’ve met some. One of the good things about our regular monthly meetings is that if you have a good proposition and you can get in touch with us through the sign-up and within a month, we introduce them to some real investors. Also, in our meetings, pitching is strictly forbidden, but you can ask for advice during the mentoring session with one or two investors.
SC: You have a bit of a history in corporate venturing and M&A. So how did you wind up an angel investing and how did you start?
TR: I started as an M&A consultant for a while, working mostly for Phillips. At that time, I was offered smaller fundraising jobs which I didn’t take as they offered less money. So I thought of having a standardized contract and automated transaction structure. Basically, it started from a handmade transaction consulting into, “let’s automate and standardize these transactions” firm.
SC: Why are you not starting a VC firm? Is it that hard?
TR: Well, it’s not easy because its never been done before in that particular model. But people have talked about it, the ideas around, maybe something will happen soon. Also, official talks are in the place already.
SC: Your next step will probably be a VC fund of your own?
TR: No. I’m committed to Leapfunder for the foreseeable future of at least five years but we may still have a role in promoting such a firm that could fill that gap, supporting it.
SC: So what’s next for Leapfunder as a company?
TR: We got regulatory clearance in Sweden and Denmark. So we’ll have our presence in the Nordic region due to its legal regulatory closeness, there’s enough familiar feeling of similarity and it’s a very good startup scene up there, right?
SC: What will happen with Leapfunder within the next 5 to 10 years, is there at a potential for an exit? Will there be a consolidation in the market, a lot of platforms buy you or would you have to go IPO or is this just you know just growing market after market and becoming bigger?
TR: We don’t know, do we! Well, IPO is a very specific thing which I don’t expect it would happen. We’ve developed a unique solution for the European market, and it works very well. In general, we like to stay, and I guess we are very much, about the local communities.
SC: To summarise Leapfunder in 5 years would be the biggest angel community in Europe or it is it?
TR: Of course yes. We are trying to expand to many more countries in Europe.
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