The Future of Venture Capital is Now
February 6, 2014
investiere.ch is an example of how modern software can revolutionize the venture capital market. In Spring 2012, SELISE was given the opportunity to become a software development partner of the investiere.ch crew (https://www.investiere.ch/impressum). The following blog post explains this interesting and innovative business model.
Traditional financial products are not yielding the returns they used to. As a result, a growing number of investors are considering new opportunities, such as venture capital. But investors should be aware of the fact that venture capital investments are high-risk. Although the potential returns on investment can be extremely lucrative, the risks are correspondingly high. Evaluating start-ups is a difficult undertaking, since young companies do not have a long history and an extensive paper trail that can help potential investors reach an informed decision. Furthermore start-ups usually have bold business models that could potentially completely disrupt an industry (hence the opportunity for very high returns), but the risk of failure is also accordingly high. For this reason, venture capital investors (such as VC firms and business angels) use rigorous, complicated and time-consuming tools and methodologies to analyse the value and potential of start-ups.
investiere.ch is a platform that performs the job of such a venture capital firm with the help of an extensive investor community and the use of intelligent software. By bringing entrepreneurs, experts and investors together, investiere’s platform facilitates the process of selecting, screening and financing promising European start-ups. Based on interactions that take place on the platform, the investiere team pre-selects investment opportunities that catch the attention of their community and meet their strict requirements.
Value to Investors
So how does investiere.ch help you as an investor?
The website allows you to learn about the fastest growing start-ups and understand what the community thinks about them. As a member of the platform you can follow companies that interest you and see who else is keeping an eye on them. This helps you keep up-to-date and monitor any relevant developments within a given company.
Opportunity to Entrepreneurs
As an entrepreneur you can create your own company profile for free and instantly start building credibility and exposure. The “social proof” factor plays a vital role in this process. It is a ranking based on an algorithm that considers opinions and endorsements from the most relevant community members. Industry experts and seasoned, experienced investors can also “push” a company. Start-ups that attract the attention of prominent members on the platform have a higher likelihood of being presented as an investment proposal on investiere.
A big challenge: Whom to show what
Confidentiality and transparency are a big challenge when dealing with start-up financing. On the one hand, companies want to ensure that their business model is not made public, on the other hand investors want access to detailed information about a company in order to make an informed decision. Investiere assures that confidential information is treated accordingly and only shared with individuals who are entitled to see it.
After identifying a promising investment opportunity, investiere performs extensive due diligence and if the company meets all the requirements, an investment proposal is launched on the platform. Approved investors can indicate their interest to participate in a financing round (starting at 10’000 Swiss Francs, ca. 10’000 Dollars) by clicking on the “I’m interested” button. At this point the entrepreneur starts interacting with the investor. If the company is interested in collaborating with a given potential investor, they grant him or her access to their detailed business plan, market analysis and further relevant information that helps the investor reach an informed decision. Being able to choose which investors they accept helps companies gain access to as much “smart money” as possible. These are funds provided by investors who are industry experts and can provide the young companies not only with financing, but also with valuable know-how and access to relevant networks.
With more than 20 financing rounds in Switzerland within three years, investiere.ch is one of the most successful online investor communities on the Swiss market. After focusing almost exclusively on Switzerland, investiere.ch is starting to expand its reach internationally.
Now where do we, SELISE rockin’ software, fit in with this complex offering? Well, the whole software development behind investiere.ch draws on a team of Developers, User Experience Designers and Software Quality Assurance Engineers of SELISE. Our team does not only develop software, but also consults investiere.ch on UX design and technology choices.
The technology stack of investiere.ch is based on:
– Drupal 6 RESTful Web Services
– Core PHP
– PEAR Framework
Investiere‘s platform is not only a website, but also a strong software tool that draws on the activities of a highly involved community.