Funding is almost an unavoidable burden most startups would encounter during their evolution. It is the phase where the startup’s product/concept gets assessed and valued as a viable product worth investing in to drive forth and generate revenues.
Thus, entrepreneurs, experts, mentors, and specialists, have all been trying to find the appropriate funding channel for each startup, depending on its maturity level and development needs. Competition prizes, bootstrapping, angel investments, crowdfunding, VC and equity funding, up to Initial Coin Offering (ICO), are all various models of financing that startups could explore.
Investment funding platforms are also one of the alternatives that could be added to the list. These platforms match between investors and entrepreneurs seeking financing.
Lead Angels is a MENA-focused startup funding platform for revenue generating companies seeking an investment ticket between $500,000 and $2 million and equity financing.
The company was launched in January 2018 by four entrepreneurs: Mark Thackeray (chief technology officer), a serial IT entrepreneur and cyber security expert, Nabil Nazer (chief investment officer), who’s the CIO at Al Sulaiman Group in Saudi Arabia, and whose expertise encompasses investments, finance, and strategy with multi-sector experience across the GCC and Middle East, Tuba Terekli (managing director), high commissioner for Saudi Arabia World Business Angels Forum, and the former CEO of Waqf Iqra and cofounder of Qotuf Alriyadah Development company, the first private entrepreneurship foundation in Saudi Arabia. She also established Flat6Labs Jeddah, and is the Saudi host for Global Entrepreneurship Week, and Nick Roberts, (CEO), a former equities trader at London- based Winterflood Securities.
For VCs and investors
“We offer companies instant exposure to an accredited investor network while our investor members are given access to already part funded deals. Although the process is online, our model is very different [than] crowdfunding. Minimum investment size is $25,000 and the valuation is determined by the lead investors funding commitment,” explained Roberts.
Though still in its early beginnings, Lead Angels has collaboration agreements with a number of VCs and angel networks in the region and is onboarding new individual investors onto the platform on daily basis. “Our investor base is a combination of individuals and organisations,” Roberts added, these include MEVP among others under negotiation. For investors, such platforms could bring convenience.
According to him, convenient access to investor-ready deals that have already attracted investment and undergone extensive due diligence is key. He explained that “the fact that terms and valuation are already negotiated and driven by market forces,” is another added value.
Before applying to be listed on the platform, startups must start by sourcing a lead investor and the same terms and valuation negotiated by the lead investor must also be made available to Lead Angels members.
Convenience is also what startups will get. “Fundraising is an incredibly long-winded process and founders don’t have the resources to effectively fundraise and simultaneously grow their business. We provide instant access to accredited investors and in return take a success fee [five percent] on any funds raised through the platform,” Roberts explained.
The company focuses on early stage startups with revenue throughout the MENA however it’s also interested in bridge rounds for mid-stage companies. Besides funding, which is Lead Angels’ core business, the platform informally helps startups away from the platform by introducing them to relevant partners in the ecosystem.
The platform is currently facilitating the fundraising for Vbout, a Lebanese all-in-one marketing technology platform with tools for multi-channel campaigns, with MEVP as lead investor. So far, the company has raised $450,000 out of a $900,000 funding target.
“Successful fundraisings will drive us to profitability very quickly,” he said, mentioning that they will be operating profitably if they close one deal every two months.
Regionally there are several groups facilitating funding for startups using a variety of methods. “Our approach is to provide the necessary infrastructure to bring these groups together and to build mutually beneficial syndicates. We’ve entered into MoUs with a range of VCs and angel networks in the region and we regularly exchange funding proposals through open channels of communication,” Roberts explained.
Globally, there is a number of intercontinental online funding platforms however they lack the physical / offline presence suited to business culture in the MENA region, Roberts said.
Gust, for instance, is a New York-based company that offers similar services. It is a SaaS funding platform for the sourcing and management of early-stage investments. It enables entrepreneurs to collaborate with investors and angel investor networks by virtually supporting all aspects of the investment relationship, from initial pitch to successful exit. So far, over 500,000 startups have used the funding platform to connect and collaborate with over 45,000 investors. The company was founded in 2004 under the name Angelsoft and is privately held. OurCrowd also offers similar services. The platform that started in 2013, was driven by the idea that the business of building startups grows bigger and better when the global 'crowd' gains access to VC-level investment opportunities.
“Although our model is centered around a website, much of the engagement is face to face and we rely heavily on the deep-rooted relationships fostered by our team,” Roberts added. He concluded: “Fortunately, the funding picture and general startup environment is improving however cross border bureaucratic inconsistencies and high business set up costs remain an issue.”