At the time of publication: Seed | Total funding raised: 15mn USD
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Imagine watching a Shark Tank live and you can make investments in the startups that are pitching!
Stonks brings this to reality. It hosts 'demo day' events on its platform where startups pitch live and investors can view these pitches and commit funds immediately. Currently many top startup accelerators like Techstars and 500 Startups are hosting their demo days on Stonks. The demo day pitches are streamed live on Stonks and investors can commit capital live on Stonks.
Below is how it works.
Stonks partners with top startup accelerators (eg. Techstars) to ‘host’ a bunch of startups to pitch to investors. Investors can see upcoming events and add to their calendar.
I attended an event ‘Paris Techstars Summit’ in July and there were 400+ RSVPs and around 140+ VCs, Angels and Founders made it online. (This was an offline event but streamed online and open to investors online).
You can see the startups that are pitching in the event. You can see their metrics and also the pdf of their pitch deck during the event.
Once the event began and startups started pitching, a number of them started getting ‘intros’ from the online investors (only accredited investors allowed to invest as per regulations).
A number of startups started hitting their fundraise goals within 10 mins of their pitches. As an investor you can give an ‘intro’ with the amount of money you are willing to commit with some info about yourself. and the value add you bring.
Once you make an intro, you will be connected with the founder over email where you can ask follow-up questions. If both parties agree, you can then wire the money and update on Stonks the closing terms and wire information.
Usually, once the live event ends, the ‘host’ can set an expiration time period during which time the fundraise will continue to be open. For example, in a recent event (Fall Demo Day of the accelerator 500 Startups), the fundraise is open for nearly a month.
A number of them have received interest well in excess of the funds they are raising. In this event alone, ‘interest’ of 53mn$ has been registered. This level of interest is very consistent across many events!
Stonks describes itself as 'Like Twitch + Angellist + Shark Tank' had a baby. While this may look ‘gimmicky’, there is sold value proposition for both founders and investors.
The value proposition for founders:
1. Pitch to a wider set of investors
2. Because it is live and time bound, the FOMO gets you a higher fundraise and an attractive valuation (YCombinator does this very well)
3. Fundraise immediately and save time
The value proposition for investors:
1. Get access to deal flow - such opportunities are usually only available to brand name VCs. (In the event I attended, I noticed many angels who participated, and they seemed to outnumber VCs online)
2. Get a good flavor of the trends in different sectors even if you are not committing money in the event
But the challenge is that in such a model there is high scope for regret later. Investors may have buyer remorse later and may feel that they didn't have enough time to evaluate. And with the bubble of 2021 having burst, investors are clearly not going to overpay.
This is where hosts are super important. The trust in the model comes from having trustworthy hosts. Trusted hosts curate startups you can trust in and validate the pitch decks, technology claims etc. And as noted earlier, Stonks has onboarded the first group of trusted hosts in the form of very well-known accelerators like Techstars and 500 Startups.
In the future, the type of hosts can change. They basically need to be good startup curators who have put in the work to become trustworthy and have access to founders. There can be many types of startup curators can be (apart from institutions like accelerators)
1. Well known angel investors themselves who can curate startups
2. Well known domain experts (eg. say in biotech) whose judgment can be trusted by other investors
3. 'Local' community leaders in the startup ecosystem - for example, someone with good connections with founders who are ex-Stripe or Stanford alums
4. Specialist seed funds who can help their portfolio raise more money
and so on
Stonks is like a three-sided marketplace that can be very defensible with network effects - more great founders and startups (enabled by more high-quality hosts) on the platform will bring in more investors and more investors means the platform will be very attractive to founders.
Stonks is able to get virality due to an inherent advantage in its model - accelerators, existing investors and startups will want to spread the word. Stonks also conducts really cool ‘live customer rounds’ where a startup’s customers can invest in them. Stonks itself raised funds once via its own customer round.
Stonks doesn't charge any fees from startups or investors but we can imagine with the value created, it can monetize from either side and each demo day event can bring in a very tidy sum.
It has already launched one such effort called Demo Day Vehicles which adds further value. Founders can create something called a DDV (Demo Day vehicle). It is a frictionless ‘investor checkout’ experience. Investors can wire money first (held in an escrow-like DDV bank account) and then complete legal formalities later. This helps founders get funds faster and investors to show their commitment. This also helps founders filter investors who are really serious about investing in them. Stonks charges founders $6k for setting up the DDV. Founders can also send the same ‘DDV Link’ to other investors to get them to invest.
The traction so far that Stonks claims is very impressive.
$100Mn+ funds wired
100+ events hosted so far
25k+ accredited investors on the platform
1500+ deals completed
Around 60 partner accelerators (the hosts)
Stonks also can help investors discover high quality startups in emerging countries (enabled by trusted host organizations). I believe Stonks has massive future potential and can potentially become a default ‘must-do’ for startup founders.