In just two years, a locally based funding platform has helped startups raise millions. Now, it has raised its own funds to fuel growth.
Diadem Capital, which helps connect private companies to venture capital, non-dilutive funding sources and venture debt, recently closed a $600,000 pre-seed round. The Buffalo-headquartered company aimed to raise $500,000.
“All of this is a relationship business,” said Stephanie Rieben, CEO and co-founder who is based in New York City. “In the private world, it feels like founders are left to fight for themselves because there’s no platform out there or service that helps them, so that’s where we come in."
The round was led by Launch NY and also included Innovent Capital Group, strategic investor Paddock Ventures, former Citi seniors and colleagues and angel investors like New York Angels and individual angels from the Buffalo area and Westchester County.
Diadem Capital, which launched in January 2022, has facilitated 20 deals totaling over $60 million and has over 700 venture capitalists and about 100 lenders on its platform. The startup has a success-based fee model, which means no upfront fees until the business gets funding through the platform.
The company expects to split the pre-seed funding between talent, marketing and technology. Already, the team has grown from three to five, not including contractors, with the addition of a vice president of venture capital and an operations analyst.
The platform added this year venture debt as an offering and expects to grow by adding other products like limited partner matchmaking, based on feedback from venture capitalists about pain points in the industry.
“At the end of the day, this is going to be a network effect company,” said Joe Hammill, COO and co-founder. "As we get better and better deals, we will get more and more investors. As we get more and more investors, we will get more and more deals. And each side helps grow the other side."
The business is already working with one Buffalo-based company and wants to support the local startup ecosystem. Even if startups aren’t a fit for Diadem Capital, the team almost always does a call with interested companies based in Buffalo, Rochester or Syracuse.
“If we’re not going to work with them and they’re local to the ecosystem here, we try to give them helpful advice,” said Hammill, who is from the Rochester area and now lives in the Buffalo region.
Rieben and Hammill said that sometimes founders compare themselves to competitors and think that they should be able to raise similar funds in the same amount of time. But behind the scenes, startups have months of conversations before starting a funding round and it’s important to first have your lead investor secured, which can be a slow process.
Otherwise, co-investors could be waiting on the sidelines for months and startups might lose some of them.
“It’s going to take you longer than you expect,” said Hammill. “They need to start earlier and with reasonable expectations.”
Diadem Capital is one of the 13 local companies that have acknowledged a private, growth-oriented round of funding this year. The list includes Azuna ($3 million), Immunaeon ($600,000), Latte ($100,000), Aerovec ($178,000), CleanFiber ($6.7 million), HELIXintel ($11 million), Arbol ($350,000), CaHill Tech ($250,000), FoodNerd ($1 million), LenderLogix ($500,000), SelectFI ($1.985 million), AireXpert ($3 million) and Diadem Capital ($600,000).
