“The most valuable resource that you have as a founder is time.”
So says Alejandro Cremades, Co-Founder & Executive Chairman at Onevest. He would know — not only because he co-founded a company himself, but because that very company is in the business of helping entrepreneurs make their dreams a reality. The current system of venture financing, in Cremades’ opinion, forces the heads of fledgling companies to spend far too much of their most precious commodity in the wrong places.
Cremades recently shared with PYMNTS his views on why the financial element of startup investment — at least in the traditional sense — is actually only one piece of a much larger puzzle, and how companies like Onevest are helping to bring about a revolution in equity crowdfunding.
Introduce us to Onevest. How exactly do you streamline the financing process for startups?
AC: We identified the financing piece — which is the platform that people call equity crowdfunding nowadays — as playing small ball. The bigger game is creating a network that supports founders and investors from formation to financing, and really take over the entire process by essentially creating a funnel. To that end, last year, we acquired CoFoundersLab.com, the largest matchmaking service for co-founders.
To give you an example of how it works: If you’re entering the business world but you have, say, an engineering background and you lack the specific skill set to launch your venture, you would go to CoFoundersLab, where you would meet your match and then launch your company.
Right now on CoFoundersLab, we are onboarding over 2,000 entrepreneurs a month. The beautiful thing is that many of these companies that are forming are later graduating to seek financing on the Onevest platform. At Onevest, we accept less than 3 percent of the funding applications that we receive — only the best of the best. Through our network, we then connect those companies with accredited investors.
The equity crowdfunding landscape is opening up, now, in large part due to Title IV of the JOBS Act. Implemented last month, it lets companies raise up to $50 million from accredited and non-accredited investors for the very first time. We launched our Series A round on our own platform to celebrate that.
Without a doubt, these are exciting times. What’s particularly exciting for us is the network that we’re creating: it’s really helping to drive innovation and to get that innovation financed.
Speaking of innovation, Onevest attests to revolutionize venture financing by making the process easier, faster, and more transparent. Could you tell us about how you achieve that?
AC: For an early-stage company that’s raising money “out in the world,” as it were, the process takes an average of eight months. That’s because you have to educate potential investors, you have take the time to go to conferences, get everybody up to speed, and so forth.
All of that uses up the most valuable resource that a founder has: time.
What we do is streamline the entire process, so that you can not only access a completely new pool of potential funds, but also leverage the power of Onevest for your community. It’s a good way to drive people to Onevest and to your offering, all without having to leave your desk. That saves you all the time that you would have spent in conferences and so forth, meeting new people, to try and scale up your business.
The traditional methods of fundraising are inefficient and outdated. Online, you’ve got everything in one place: your pitch deck, your videos, and the information about your company and the people on your team. There’s no more emailing back and forth. Everything happens on the platform itself, from transactions to the signing of documents — you name it. The online world is the future of investment.
What are some of Onevest’s biggest successes to date?
AC: The biggest success story is probably our own team. The group of individuals that we’ve assembled at Onevest is what I’m most proud of.
In terms of companies that have been financed through our platform, though, Revolv is a great example of a success. They came out of CoFoundersLab, and were recently acquired by Google.
There are other stories that I’m very excited about — for example, ZumXR, which rebranded as Xtend-Life. With our help, they closed around $1.5 million, and they’re now one the best-selling drinks at Whole Foods. We’re also proud of Imperative, which came out of CoFoundersLab; they closed around $850,000.
Another cool one is Pristine, an app for Google Glass that helps surgeons. They closed about $750,000 with the help of our platform; three months later, they landed $5.4 million in Series A funding.
There are really incredible stories that come out of Onevest. Not only are we helping those founders get the word out, but we’re also giving access to investors that might not otherwise have it. You don’t have to be a Silicon Valley insider to get these kinds of opportunities; with Onevest, you can participate in them from the comfort of your own home — while wearing your pajamas, if you’d like.
You guys are in the midst of your own Series A round, which you mentioned earlier. It’s closing soon, correct?
AC: Yes; we’re closing at the end of this week. So far, the experience has been pretty amazing.
We launched ourselves from scratch, and in doing so, we’ve been able to really understand how our service works. We’re not a chef that hasn’t tried his own food; on the contrary, we’ve experienced our own service and we even learned how to improve it as a result.
We’re excited to implement new features that I think are really going to make a difference for entrepreneurs moving forward.
Onevest is planning to triple its business in the next year. How are you going to achieve that?
AC: We’re tightening up our team. For example, we just hired Erica Duignan as our Head of Deal Flow. She was formerly the Managing Director of DreamIt Ventures, which is one of the leading accelerate programs for startups in the U.S. She’s pretty amazing.
Last year, we did 13 deals. This year, we intend to do over 30. Our bringing more senior people on board — bigger people in the startup ecosystem — shows that the equity crowdfunding arena is being taken more seriously. That’s exciting for both the space overall and for Onevest, as now we’re really putting the pedal to the metal.
What’s next for Onevest?
AC: We are going to continue to try to attract any company that has the potential for high-growth business. Right now, we are reviewing more than 250 deals per month, and are always happy to accommodate more applications.
Regardless of whether or not Onevest is able to accept a company on to the platform, the CoFoundersLab remains open to everyone. There’s a network of over 4,000 advisers on the site, there to advise entrepreneurs on what steps they might need to take to get to the next level and succeed in getting financed.
Two Billion Dollar (Plus) Deals Dominate the Week
This past week’s activity was dominated by two deals, which in fact made up more than 90 percent of the dollar volume across all fund flows.
The outsized deals in the week came from the $4 billion deal that involves LeasePlan, one of Europe’s largest auto fleet and leasing managers, which is in turn being sold to a group of investors. The Dutch company’s sale via its majority holder Global Mobility, leads the pack, and places Europe as the largest geographic player for the period.
Trailing behind was the $1 billion IPO filing from China International Capital Corp., which became official last week after financial trades reported earlier in the month that the company was looking to bring its shares public. The Beijing bank is partly owned by PE firm KKR and the shares are expected to debut on the Hong Kong stock exchange as early as this autumn.
Funding in FinTech
Next to those billion dollar plus events, the next tier of funding activity might seem tame. But the fact that Notion Capital raised $120 million last week, with an eye on funding European cloud computing companies via its third fund, gives further evidence that interest, and investment firepower, is growing across the pond.
Kabbage Gets Some Green
A bit closer to home, here in the states, Kabbage, the financial tech firm, grabbed headlines last week, with a $120 million funding round (out of a continued, stated goal of $150 million in a Series E investment. The company has an $875 million valuation at this level, and its business model is focused on short term lending –via automated platform – to get working capital into the hands of small and mid-sized businesses.
Below is a ranking of the week’s activity by deal size.
By investment “type” of activity we can see that the European buyout mentioned above, and the IPO also mentioned above, pretty much eclipsed just about any other funding type, with only venture capital and later stage round funding making the “$100 million and above” cut.
Though the two deals topping $1 billion plus this past week come in among the larger ones seen to date, there have not actually been that many transactions crossing the billion dollar threshold. The chart below shows investments to date this year that came in at $1 billion or more and the month in which they occurred.