To demonstrate its efficacy, and the company’s philosophy of democratizing investing, Fundr Capital Inc. is raising $1 million on its own platform.
“We wanted to showcase our capabilities and provide more access for people to invest,” co-founder and CEO Lauren Washington said.
The Austin-based financial-technology company, a portfolio startup of accelerator Sputnik ATX, is an investment platform that uses artificial intelligence to create a diversified portfolio of startups for investors. The business automates the fundraising process by connecting founders and investors with its proprietary algorithm. It also automates the seed-investing process from the investor side by condensing the discovery and deal-closing process, while also enabling long-term relationships between founders and investors.
Washington co-founded the startup in 2018 with Boris Moyston and Chief Technology Officer Jean-Philippe Desmontils.
The $1 million seed round officially will close on Oct. 23, Washington said. The round currently does not have a lead investor, she said. While Washington and her colleagues have had conversations with several about the possibility of leading the round, a lead investor is not necessary, she said. The company previously received $100,000 in a SAFE note when they were accepted into Sputnik ATX's summer 2020 cohort, marking its total funding haul to date.
She said a portion of the fresh capital will be used to purchase a broker-dealer license. That will enhance the efficiency with which Fundr verifies accredited investors, generate “more revenue-stream opportunities” and increase participation of non-accredited investors. The company also will use the new money to redesign its website with more robust features.
Finally, the capital raise will enable Fundr to add new staff, Washington said. The company will hire between five and 10 people during the coming 12 months, including engineers, a data scientist and investor-relations and customer-service positions. It currently employs three full time, and it pays four contractors. The latter will become full-time employees with the new funding, Washington said.
DivInc partnership
Fundr last month partnered with DivInc, an Austin-based accelerator for under-represented founders. Through the new partnership, DivInc will run its cohort applications through Fundr’s algorithm, which generate a score for each startup, Washington said.
Doing so will enable DivInc to “really sort through companies based on objective criteria,” she said, instead of subjective criteria, such as how many introductions a startup’s founding team has obtained, or personal feelings toward applicants.
Washington said the partnership is a natural one, particularly with both organizations sharing a mission to eliminate bias within the investing process.
DivInc on July 26 announced that Bank of America had donated $250,000 to the accelerator for portfolio company grants.
The accelerator also will use Fundr tools to process the Bank of America contribution and allocation to portfolio companies. And DivInc will use Fundr’s monthly reporting tool that creates a dashboard to enable management of current and past DivInc portfolio startups.
Washington and her Fundr colleagues have a goal ultimately to present a DivInc-branded portfolio to investors on its platform, she said.
First cohort
Fundr in October 2020 announced its first portfolio of companies. It aims to launch its next company portfolio in “mid-September,” Washington said.
The company last year set a goal of raising $1.5 million to invest in each of those portfolio companies through convertible notes.
Once joining Fundr’s platform, startups furnish roughly 90 different quantitative data points, such as the company’s market, traction, revenue generation and team members, Washington said. Fundr’s algorithm then analyzes the startup to determine whether it may use the Fundr platform, and how much capital it could raise.
Washington told Austin Business Journal in December that Fundr is not a crowdfunding company and instead works with accredited investors looking to invest in more diverse companies.
It saw its user count grow by an average of 137% each month last quarter, Washington said in a statement.
Fundr currently boasts 300 investors who have signed up to use its platform, and it has a network of more than 1,000 investors to which it sends potential deals, the CEO said. About 700 startup companies currently exist on the platform.
“Through our new partnerships, we expect exponential growth” in that area, Washington said.
The company remains fully remote, and has no plans to secure physical office space in the foreseeable future, the CEO said.
Washington declined to share revenue figures, but said Fundr is not yet profitable. The goal is to achieve profitability next year, she said.
The CEO teased an international partnership announcement that will be coming “soon,” Washington said. She and her colleagues are exploring opportunities in the Caribbean, France and Nigeria.
Washington said competitors include New York City-based OpenDeal Inc., a crowdfunding company that does business as OpenDeal Inc.; AngelList Holdings LLC, which does business as AngelList, a San Francisco-headquartered business that operates a website for startups, angel investors and startup-position job seekers; and, New York City-based SeedInvest Technology LLC, which does business as SeedInvest, a crowdfunding platform.
But Washington said no competitor is automating investing and using AI to automate portfolio diversification like Fundr.
A previous version of this story misreported how much money Fundr had raised to invest in its first portfolio of companies.
