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Crowdsourced diligence insights for investors
SAN FRANCISCO—Investing in complex technology startups can be daunting, but Propel(x) is aiming to demystify investing in these startups with the debut of its crowdsourced Diligence Insights capability. Propel(x) connects deep technology startups with angel investors and claims to be the only online investment platform to incorporate due diligence at this level, sourcing expert insights to better equip investors in making more informed decisions.
With Diligence Insights, investors can now collectively conduct diligence on a startup to tackle the most common research areas, such as seeking expert advice on the technology, gauging market potential and analyzing the competition. The service also provides the means to gain insights from experts, customers and the startups themselves, to better understand the technology and market potential; review a rich repository of curated information, along with relevant background information submitted by the startup to aid in the investment process; and finally, access scheduled video conference calls on the platform to interact with startup founders, streamlining the communication process for both investor and startup.
Propel(x) defines “deep technology” startups as companies founded on a scientific discovery or meaningful technological innovation. These startups are in the life-sciences, energy, clean technology, computer sciences, materials and chemicals sectors. Propel(x) developed Diligence Insights because completing the level of diligence to invest in this type of technology can be challenging, and the level of research necessary to make an informed investment decision is often time-consuming. Propel(x) streamlines the diligence process by leveraging the power of its community of experts.
Swati Chaturvedi, the company’s CEO and co-founder, declined to share any client names with DDNews but said that three of the 20 startups Propel(x) has worked with thus far have been drug companies.
Through the online diligence tool, investors are able to submit any question they think will help the diligence process. The community can then vote up the most compelling questions, which then get forwarded to the startups and independent experts to answer. Investors can also refer industry experts, submit market-size estimates and identify companies they view as competitors. This information is then curated within Diligence Insights, along with relevant background information submitted by the startup, providing a repository of information to aid in the investment process. Additionally, regularly scheduled video conference calls are hosted and archived to allow investors to interact with the startup founders, streamlining the communication process for both investor and startup.
“In our experience, there is a passionate investor community with an appetite for exploring investment opportunities beyond Internet companies and mobile apps,” according to Chaturvedi. “Many of these investors have worked in similar industries, so they already have an appreciation for the potential impact these technologies will have on humanity. In addition, since many angel investors tend to invest in industries for which they possess some level of knowledge, it’s a natural fit for them to consider making investments in deep technology companies.”
Unlike other equity-based crowdfunding portals with broad technology portfolios, Propel(x) is home to investors with specific interests that seek curated, deep technology companies. It’s an investment platform built for the “accredited investor” as outlined in Rule 501 of Regulation D by the Securities and Exchange Commission. Propel(x) was founded in 2013 by Chaturvedi and Lisheng Wang, classmates from MIT. Through its community-centric diligence processes, Propel(x) goal is to demystify investing in deep technology and remove the funding barriers for these startups.