Bitspiration 2016: Financing start-ups through online platforms

### Overview In this talk from Bitspiration 2016, Yan discusses the disruption of startup financing through online angel investing platforms. Clarifying that the session focuses on equity angel investing rather than reward-based crowdfunding like Kickstarter, Yan shares his personal journey from studying applied math at Harvard and working six years on Wall Street to becoming an angel investor. Traditionally, early-stage tech investing required physical proximity to Silicon Valley and extensive offline networking. Today, online platforms democratize access for global investors and provide founders with broader pools of capital.

### Key Topics - **Evolution of Tech Investing**: The shift from an era where top university graduates pursued Wall Street to computer science dominating student interest, mirroring the disruption of venture capital by online platforms. - **Motivations for Angel Investing**: Beyond seeking financial gain, angel investors participate for intellectual challenge, community involvement, and the valuable education gained by reviewing startup pitches and business models. - **Major Online Platforms**: Platforms such as AngelList (the largest player, originating from a blog and email list), FundersClub (which focuses heavily on Y Combinator startups), and Wefunder (leveraging updated US regulations). - **Regulatory Changes**: The shift in US regulations enabling non-accredited individuals to invest, moving beyond previous thresholds that required $200,000 in annual income or $1,000,000 in net worth excluding primary residences, with minimum ticket sizes dropping as low as $100.

### Technical Details & Online vs. Offline Comparison - **Investor Benefits (Online)**: Platforms decouple deal sourcing from decision-making, allowing analytical investors to participate without needing networking skills. Smaller check sizes ($100 to $5,000) enable robust portfolio diversification across sectors, geographies, and even direct competitors (which was previously barred in offline deals due to confidentiality). Examples of major successes originating on platforms include Cruise Automation (acquired by General Motors for $1 billion), Instacart, and Zenefits, alongside Polish startups like UXPin, Estimote, and Jiko. - **Founder Benefits (Online)**: Founders gain an international base of supportive backers who assist with hiring and sales, more flexible capital inflows, avoidance of overbearing offline angels, and a cleaner cap table created by syndicate special purpose vehicles that pool many backers into a single entity. - **Offline Advantages**: In-person investing still offers closer advisory relationships, stronger personal track records for those aiming to raise VC funds, avoidance of US accreditation rules for local European investments, and direct support for local ecosystems. - **Disadvantages**: For founders, putting deals online creates exposure that may compromise confidentiality, though many founders are overly protective when competitors are likely already tackling similar problems.

### Takeaways The boundary between online and offline investing is increasingly porous: online connections often lead to in-person relationships, and offline investors can help local startups access global platforms. With legal reforms and lower capital minimums, anyone from students with $100 to experienced professionals can participate in early-stage technology investing.