As a startup capital investor, we’re always watching for trends that can shift the landscape of entrepreneurship. One of those trends: how innovations in both startup funding and digital securities can make it easier for investors to find opportunities, while also making it easier for entrepreneurs to access startup capital.
The truth is, the current funding landscape presents challenges for both entrepreneurs and investors. In fact, according to our recent Early Stage Investing and Fundraising survey, we found that investors rated the difficulty of finding quality opportunities at a 7.2 out of 10. Entrepreneurs also shared the process was difficult, with founders rating the difficulty of raising VC funding at 6.9 out of 10.
However, it’s interesting to note that, in relative terms, investors believe it’s more difficult to source quality opportunities than founders believe it is to access capital.
This goes to show that there is plenty of room for innovation that brings these two groups together, and connects them more efficiently.
For entrepreneurs, the challenge is broadly one of access:
The reality is, most businesses aren't VC-backable. Not all businesses will qualify for a bank loan. And that’s okay. The problem is that there are few other options when these two doors are shut.
Innovation in early stage startup funding is happening rapidly, led by new financing models (like the Chisos CISA) and investors that don’t fit the traditional VC mold.
For investors, the challenge is a blend of access and risk.
There is room for technological innovation that helps angel investors de-risk their investments, and evaluate potential more objectively.
We’re seeing that innovation in digital securities and startup funding, supported by related innovations in the blockchain space, may increase access to startup capital.
Now, the ability to tokenize capital raises, as well as an emerging secondary marketplace for those digital asset securities using a platform such as Securitize, makes it possible for more people to invest in private businesses and to find a path to potential liquidity.
Now is the perfect time to disrupt the current investment landscape, and provide innovations that support entrepreneurial flourishing.
Increasing access to early stage capital for a diverse group of founders is good for people, and good for business.