Propel(x) is an online angel investing platform focused on the niche of “deep technology” startups – that is, startups that are founded on a true technological innovation or scientific discovery. Prior to starting Propel(x), Swati Chaturvedi, its co-founder and CEO, previously worked in management consulting and investing, most recently at Exigen Capital and before that at Siemens Venture Capital. Swati is also the co-founder and coordinator of an angel investors group for MIT alumni in the SF Bay Area. In working with the group, she saw several ways in which the angel investing process could be improved. Propel(x) is geared toward filling the gap, and making angel investing a more efficient process. Swati has an MBA from the Sloan School of Management, an M.S. from MIT (Technology and Policy Program) and an M.S. from UC Berkeley (Civil Engineering).
AIMkts believes that healthy self-interest of investors will continue to bring to reality things that were the stuff of science fiction just a few decades ago. And, so, it was with great interest we recently sat down with the co-founder of an investment platform designed to help facilitate these kinds of investments.
Propel(x) is an online angel investing platform that provides a streamlined process for investors to find, research and invest in deep technology startups. “Deep technology” startups are founded on true technological innovations or scientific discoveries across a diverse range of fields, including: life sciences, energy and clean tech, computer science, telecom, and materials.
Online investing platforms are dominated by consumer, internet and social, local, mobile app startups. Prior to starting Propel(x), my co-founder Lisheng Wang, and I co-founded an angel investing group for MIT alumni focused on deep technology startups. Both Lisheng and I are extremely passionate about deep tech, as we believe these startups are developing technologies that truly matter to society. Deep tech is what’s going to cure cancer, it’s the next source for clean energy, the next lighter weight material … While these are extremely important and exciting companies, we found that as online investing really started to take off, these deep tech startups were being left out.
When we started exploring why deep tech startups were glaringly absent from online investing platforms, we realized that the complexity of these technologies requires much more diligence when compared to other startups. Lisheng and I had experienced firsthand the challenges of performing diligence on deep tech companies with the angel group we run for MIT alumni.
So, we decided to start a home for deep tech startups and at the same time provide access to real diligence in order to bridge the understanding gap between investors and deep tech startups. My experience in performing diligence for private equity and VC firms has also proved to be valuable in building out the Propel(x) platform.
First of all, we are the only online platform dedicated to investing exclusively in these deep technology startups. Angel investors are attracted to startups that are all about making a difference and improving quality of life around the globe.
The second way we stand out from the crowdfunding crowd is through our focus on diligence.
As I mentioned earlier, Lisheng and I recognized that the key to enabling investments in deep technology startups is by bridging the understanding gap currently separating investors from these technologies – through diligence.
The third differentiator I would say is our level of selection – our deal flow is high-quality and highly curated. We focus on pre-vetted startups and source our deals from the most reputable channels. In fact, we often start by working with the angel group that I mentioned earlier. Once the startups are vetted by the group, we may invite them to our platform. To be accepted onto our platform, startups must already have a lead investor in place.
We are also currently working with incubators such as Breakout Labs (of the Peter Thiel Foundation) and QB3. The companies we have already raised funding for feature teams and technologies from such institutions as MIT and Johns Hopkins.
First, we started by composing comprehensive research reports for our investors on the startups on our platform. We did primary research on customers, their management, reference checks, technology risk, market appetite – the lot of it. And we got great feedback on these reports. But we also realized that for the sake of scalability and objectivity, at some point we would need to find a way to enable our investors to get involved in the diligence. And now, we are in the process of developing a groundbreaking, first-of-its-kind due diligence platform that will enable interaction between investors and experts organically online. In effect, the due diligence will be crowd-sourced as investors actively participate and share information in the diligence process.
I would say – “Do your diligence!”
There is a fad right now in the online investing space to play “follow the leader” – to just look at who else has invested in a company and blindly invest based on that person’s reputation or celebrity status. To me, especially with my background in private equity and VC, this is unfathomable. It is highly reckless to ‘follow’ someone else into an investment.
There is a widely cited Kauffman Foundation study that validated the common sense notion that the more diligence an angel investor performs, the greater his or her returns end up being. In that study, the benchmark was 20 hours of diligence. Investors who exceeded 20 hours received almost six times greater returns than those who didn’t. At Propel(x), we’re really trying to encourage intellectual independence and responsible investing. And that’s why were so excited and enthusiastic about the crowd-sourced diligence platform we are building.
I really think our diligence platform is going to be a success. And I have a lot of confidence in the quality of the deals on our platform. So, I think we’re well-positioned for the future. I envision a living, breathing platform – a thriving community of angel investors actively participating in the diligence process and in turn, making informed investments in a broad range of exciting deep technology startups developing “technologies that matter.”
For more about Stephanie Strait, check out her LinkedIn profile.
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