The MetroStart Plan
Startup investing in our region typically is performed with a “herd mentality.” One wealthy person decides to invest, performs the due diligence, structures the deal, and brings their friends along.
Minimum investments often are $25,000 to $50,000. Many angel investors have invested in one or a handful of deals, and they lost all or most of their money.
Statistically, this is a poor way to invest. Multiple angel investor studies have shown that investing in multiple startups produces more success. In fact, the average angel investor who invests in 12 companies over a 5-year period produces a 22% to 27% annual return on their investments (triple the typical stock market returns).
Changes in SEC laws now allow startups to raise capital publicly, spreading risk to a higher number of investors. Modern investment instruments (convertible notes that follow the founder) make early deal structuring much easier and safer for all involved. By accelerating the use of these tools, our region can significantly increase the number of successful startups and greatly improve investor returns.
MetroStart is a non-profit organization with this simple plan:
1. Create an ever-growing database of “micro-angel investors.”
2. Teach entrepreneurs to publicly raise capital using a simple Regulation D 506(c) SEC filing or, in some cases, a Regulation CF filing.
3. Organize multiple regional angel investor groups, accelerators, and startup organizations to perform due diligence and deal structure for startups.
4. Create and utilize a MetroStart investment agreement that collectively has been approved by the screening organizations.
5. Connect approved startups with the “micro-angel investors,” encouraging investors to place at least $1,000 in each of 12 startups or more every 5 years.
6. Get many more startups started in our region and move investors toward the 27% annual rate of return on their investments.
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