Area startups now have a new way to access funding.
That's thanks to a recently announced partnership between Covington-based tech accelerator UpTech and Cincinnati-based investment crowdfunding platform Wunderfund.
Those accepted into UpTech will receive an investment of up to $50,000 from UpTech. Upon meeting the accelerator’s milestones, they have the opportunity to launch an equity crowdfunding campaign via Wunderfund, using UpTech’s final milestone investment of $10,000 as a seed kickstarter.
From there, participating startups can seek up to $1 million in additional capital through the platform.
The partnership looks to alleviate a host of funding problems that area startups face, the first being a lack of angel investor representation.
"Most investment minimums in startups or funds are approximately $25,000, which is a substantial barrier to entry into the angel investing world," a release on the move states. "The UpTech/Wunderfund partnership changes this by lowering the table minimum to as little as $50, coupled with additional education for investors."
Additionally, the UpTech and Wunderfund teams found that while the accelerator's $50,000 investment was substantial, it was often not enough to help startup teams get from their accelerator graduation to their initially funding round.
"Activating this new funding opportunity during the UpTech program can provide more money for startups to get to a proper institutional round of funding," the release adds.
Lastly, UpTech and Wunderfund hoped to democratize the funding process, as SEC offerings often require participants to be accredited investors — those who make $200,000 or more a year or have a net worth of $1 million-plus.
"This cuts out 97 percent of the population," the release says. "The goal of the UpTech/Wunderfund partnership is to create an inclusive and diverse investor pool with the purpose of educating and exciting a future of potential startup investors (or future angels). Unlike Kickstarter or Indiegogo, investors on Wunderfund become more than just a donor — they become an owner in the startup."
The two entities' leadership expressed excitement at the move.
"Equity crowdfunding is a great equalizer for both startups and small investors," said CEO of Wunderfund Marvin Abrinica. "Entrepreneurs who have traditionally had less access to capital, such as women and minority-led startups, are increasingly turning to crowdfunding to level the playing field. Now everyday Americans can invest alongside angel investors. It's a giant step towards economic equity for all."
While some argue that equity funding is a risk, UpTech Managing Director JB Woodruff added that the partnership will change the funding landscape.
“Equity crowdfunding is still relatively new, but I believe by coupling it with the established funding model of accelerators we have found a way to accelerate its place as a viable startup funding strategy," he said.
Eligible startups can begin the funding process at UpTech’s Demo Day and online.
