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Emerging market startups, especially those at the pre-revenue mark, continue to find access to early-stage capital (US$150 000 to US$1.5-million) challenging. At the same time, global-minded angel investors in Europe and the US are looking to invest in quality emerging market ventures.
While news about venture deals continue to trickle out from risk-averse developing economies, Globevestor, a new Silicon Valley-based venture capital platform, is looking to heat up investment opportunities by becoming a conduit through which US and Europe-based angel funding can reach quality startups in emerging regions.
Launched in February this year, Globevestor manages the entire investment process online — think FundersClub. It takes care of the legal and regulatory requirements, operating with the US Securities and Exchange Commission’s blessing. It follows the same revenue model as a typical VC firm, charging a small management fee to cover legal and accounting expenses, and 20% carried interest when a startup hits a liquidity event.
“Having previously started a company in India and having raised capital from US-based investors, I have experienced the challenges and headaches that accompany cross-border angel investing,” says Globevestor CEO, Raju P. N.
“With equity crowdfunding and online venture capital taking off in the US, we thought that the time was right to use the trend to help democratise access to global capital markets for both emerging market entrepreneurs and developed economy retail investors,” he adds.
Before co-founding Globevestor, P. N. founded startups Sportxiom in India and Eventcheq in the US. Before that he completed a B.Tech and M.Tech in Metallurgical Engineering and Materials Science from IIT Bombay. He is also an SDA Bocconi School of Management alumnus.
He is joined by Ankur Shrivastava — B.Tech. and M.Tech. (Mechanical Engineering) IIT Bombay. Shrivastava has a background in strategy consulting and oversees business operations, startup screening and post-investment management at Globevestor.
Third team member, Gaurav Gupta — B.Tech & M.Tech. (Computer Science) IIT Delhi — has a background in product management and heads up engineering and product management.
Globevestor was funded through a Silicon Valley-based startup accelerator called Boost VC and has managed to keep the lights on by raising an additional US$100 000 from Bill Draper — one of Silicon Valley’s first VCs — as well as from friends and family.
Its online play includes tools for managing “the entire investment process” online. This encompasses things like fund and investor discovery, online payments, document signing, communications and performance tracking.
Accredited investors can browse startup deals, interact with founding teams, take investment decisions, e-sign legal documents, make payments and keep connected with their portfolio companies. A minimum investment of US$1000 to US$4000 per deal is required.
At the other end, startups can raise funds, get one-on-one mentorship and leverage networks of their well-connected investors through the platform.
P. N. tells Ventureburn that he believes Globevestor’s investment framework provides retail investors the same level of professional and sophisticated fund management that large institutional limited partners in private equity or VC funds enjoy, while keeping overheads and costs low.
Looking ahead, Globevestor plans to stay ahead of its competition by introducing new financial products and other value-added ancillary services that meet the various cross-border investing/fundraising needs of global investors and emerging market entrepreneurs alike.
Speaking of competition, since there is no universal platform for connecting investors in developed markets to startups in emerging ones — and for good reason, it’s hard — Globevestor faces limited direct competition. Israeli startup-focused, OurCrowd comes close, but at this stage Globevestor’s competition will mainly come via crowdfunding platforms such as AngelList, FundersClub and Seedrs.
Still, since Globevestor targets emerging markets, it’s in rather uncharted territory. P. N. admits that the road ahead is challenging. Each new territory is bound to present new challenges and the platform is still growing its community. To start, Globevestor has one fund and four startups: car sharing company, a monthly subscription box for kids called Flintobox, Blowhorn, an “Uber” for moving goods and Globevestor itself. The platform’s initial focus will be on India, before turning to other emerging markets over the next 3 years.
While platforms such as Globevestor and OurCrowd tout their online plays, some platforms are eager to underline their offline activities.
Startup Labs for example, a global seed stage investment fund from the team bend Startup Weekend, focuses mainly on emerging markets and co-invests with top local investors. Critically, it operates on the ground, post-investment bootcamps with top mentors.
Then there’s U-Start, an Italy based platform that matches cross-border investment groups with startups from Southern and Eastern Europe, Latin America and Africa. It uses an online platform with offline startup showcase events and mentorship.
Globevestor does have offline aspects however, though not quite as front and center as other players.
Beyond remote support, investors are encouraged to extend their connections, respond to network requests from their portfolio startups and meet startup team members as well as other investors and entrepreneurs, at future Globevestor offline and online events.
While Globevestor plans to become “the online platform of choice for funding, mentorship and education for high-impact entrepreneurship in emerging markets,” it will be interesting to see how much of an impact its virtual offering can create.