Apply HN: Seedrunners – Invest in a new startup portfolio every month | Hacker News Reader

Apply HN: Seedrunners – Invest in a new startup portfolio every month

17 pointsleodesrumaux16 comments

Link: http://www.seedrunners.com/

Every month, Seedrunners gives you the opportunity to invest in a new startup portfolio.

How does it work?

Every month, a new batch of startups – led by top students and graduates - is ranked by a community of students, professors and alumni from the best schools in the world (as well as investors).

During this month, community members can:

• Upvote and discuss their favorite startups

• Anyone (meeting our investor requirements) can invest in a pool of the best-ranked startups

At the end of each month, Seedrunners invests in the top 5 to 25 most upvoted startups with the money collected from investors.

Why should I invest on Seedrunners?

Every month, Seedrunners allows you to seamlessly invest in a portfolio of up to 25 startups with a single investment.

What’s more? You can opt to automatically invest in a new startup portfolio every month, allowing you to build exposure to hundreds of high-potential startups – effortlessly.

Why should entrepreneurs apply to Seedrunners?

Seedrunners allows entrepreneurs looking to launch their startup to quickly build up their user base, receive qualitative feedback, and obtain the necessary funding to fully execute on their startups.

To apply to Seedrunners, startups must possess at least one co-founder from a top-tier school (student or graduate), a prototype and an incorporated company.

About us: Simon and I are cousins and Seedrunners is our second startup. Simon is a software engineer at BNP Paribas New York where he helped build the bank’s market place for structured products. I am a student at ESCP Europe (a French business school) with 12 months of experience in corporate finance.

Why We're Applying: Given our similarities with Y Combinator (even more so now with the recent launch of “Apply HN”), we would probably learn more from Y Combinator than from any other program or investor.

We welcome all feedback and questions!

"Every month, a new batch of startups – led by top students and graduates - is ranked by a community of students, professors and alumni from the best schools in the world (as well as investors)." - I see this as the core problem.

Tetlock Study and a huge mound of evidence suggest the crowdsourced authority isn't a good way to gauge founder DNA.

Thanks for the feedback kumarski :)

It is first important to know that we carefully screen each startup application before allowing startups to enter a batch. We check that founders have a working prototype, a company and that their project is viable (they have the skills to build it + a clear path to monetization). In this regard, the batch that undergoes ranking by the community is already “gauged” for projects that have reached a certain quality threshold.

More directly on point, I would tend to agree with you that it is very difficult to directly assess founders’ quality via crowdfunding/crowdsourcing. What crowdfunding/crowdsourcing does however is provide a great way for a community and investors to indirectly assess founders. In a sense, founders are only good to the extent that they make an appealing product and are good at marketing it. This is at the core of Seedrunners.

With regards to studies, we could battle it out :) You can find numerous studies (see links below) showing that the crowd selects projects using the same set of criteria as VCs and is as good in selecting high-quality projects, with a noticeable ability to pick “hit” projects.

I would be happy to continue discussing with you on this topic, it is definitely one of the most critical (and contentious) points of Seedrunners.

Studies from Wharton and Harvard: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2239204 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2239204

PS 1: We realize that Seedrunners can appear very elitist. Our end goal, however, is to open Seedrunners to all startup applicants and to open community membership via invitations. But first, we have to prove that Seedrunners works in a closed environment (a smart and secure community + vetted founders).

PS 2: We did apply to YC’s Fellowship summer program the traditional way. Unfortunately, we were not invited for an interview. It seems only fitting to try with “Apply HN” :)

Aren't there a lot of legal hurdles to this?

Indeed we operate in a highly regulated environment and Seedrunners is more complex than the traditional equity crowdfunding paradigm.

Essentially, we take advantage of the regulatory environment in the UK, which allows us to market this investment opportunity to 3 categories of investors:

1) Investors who pass our 7-question investment authorization questionnaire and elect to be treated as professional clients under FCA rules 2) High net worth individuals 3) Sophisticated investors

The first category is the most important to us as it allows essentially anyone with a correct understanding of the risk they are exposing themselves to to invest on Seedrunners.

To actually provide our service, we work with multiple investment services firm that confer us the authorizations required by the FCA to operate something like Seedrunners.

Happy to answer our first question from the HN community :) Thank you!

Can a US startup crowdfund from your platform? As I understand it, US companies can't crowdfund from non accredited investors.

This assumption is correct under the traditional model of equity crowdfunding (where a company makes a public offer to potential investors).

Seedrunners works differently. Every month, we aim to raise €1,000,000 to invest €40,000 in each of the top 25 most upvoted startups.

At the end of the month, the most upvoted startups receive an investment offer, which they can accept or refuse. As such, startups applying on Seedrunners do not actually make any form of public fundraising offer and are not subject to any public fundraising regulation. As a result, startups from any country can apply to Seedrunners and “run” for funding (similarly to how any startup can run for the YC Fellowship program with “Apply HN”).

As you might guess, Seedrunners is very much for prototype stage startups looking to raise some initial funding.Our long-term goal is to invest €100K in each of the top 100 startups every month.

Can I ask how long you've been up and running? And where do most of your investors come from? It's very interesting that you're open to non-accredited investors, I didn't think US startups had access to that type of fundraising. (I think HN's flame-war detector kicked in because I couldn't reply to your latest comment.)

Of course :) We launched our prototype in February. Right now www.seedrunners.com is only a website where aspiring investors can register their interest and startup applicants can apply to our first batch.

We are in "soft release" mode (even though we are on Hacker News lol). We are currently collecting startup applications from students at my school, which is also where most of our current aspiring investors come from.

On the other point, you are indeed right. With Seedrunners, startups from all over the world and not only US startups will be able to access capital from the investor categories I mentioned previously. Our current legal structure allows us to receive investment from any person that is a "resident in the EU, EEA, Switzerland or any other country where they may legally receive financial promotions of the nature provided by Seedrunners, and are legally entitled to invest in the type of investment offered".

Sounds cool! Some (including me!) will argue that your list of schools is biased in a certain way :). I would encourage you to expand your list as 10 schools really is a short list.

The list of schools is always one of the most contentious point whenever we have the opportunity to pitch Seedrunners :)

In a sense, it is a necessary evil to have such a restrictive list.

One, creating scarcity helps us build interest in Seedrunners.

Two, we carefully review and help each of our startup build their application (as it is in our interest for every one of them to have the best profile possible for the rankings). Something we could not realistically do if we were to receive thousands of applications.

Finally, and most importantly, it has a significant marketing power when it comes to investors to guarantee that every startup is led by founders coming from the best schools in the world.

Once we have proven that Seedrunners works and have the necessary financial resources, we will easily be able to open Seedrunners to all startup applicants (same goes for community membership).

But, I mean like Yale is excluded, and a lot of really top schools. You could make a good case that the top 25 schools are so close in quality that there is hardly any difference, and it still creates scarcity.

Now I really hope you are not from Yale :)

I totally agree with your point.

But while it is true that Yale is not currently in our upcoming startups batches it will be very soon. Indeed, every month we plan to expand the list of schools and countries from which we accept startup applicants – until eventually allowing startups applicants from all corners of the world.

But at this time we don’t want to spread ourselves too thin. We rather do a few small consecutive batches well (France first, UK second, US third) and then expand from there once we have proven that Seedrunners works and have the resources to scale up.

Sounds cool! Honestly, you could probably do less than €40k, for startups to try and show some viability. YC used to do around $20k if I remember correctly, and I think the YC fellows program does around that (could be wrong).

Thanks for the feedback hotpockets :)

We actually do start lower. In practice, Seedrunners works with multiple funding targets per month, the minimum being €100,000 and the maximum €1,000,000.

With €100,000, we invest in the top 5 startups at €20,000 each. At €1,000,000, we invest in the top 25 at €40,000 each.

The idea is that with every new funding target reached, our investors get more diversification and each of the top startups more money to succeed.

We tried to show this principle in a more graphic/friendly manner on our investor page: http://www.seedrunners.com/invest/

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