Pando

Adam Draper and Invested.in Unveil Startup Crowdfunding Platform, Boost Funder

By Michael Carney , written on July 6, 2012

From The News Desk

It would appear that the Draper name doesn’t fall far from the proverbial "old money" tree.

Adam Draper, the son of “third-generation Silicon Valley VC” and Draper Fisher Jurvetson (DFJ) co-founder Tim Draper, has quietly rolled out a new startup fundraising platform called Boost Funder. The new site, which is like a lovechild of AngelList and Kickstarter, was launched as a joint project between Draper and Los Angeles crowdfunding platform-as-a-service provider Invested.in.

“Our goal at Invested.in has always been to partner with the foremost expert in each potential crowdfunding vertical,” says Invested.in CEO and co-founder Alon Goren. “When it comes to early stage startup finance, you can’t do much better than the Drapers.”

Boost allows any startup to create a profile and upload information, but in a unique twist, it allows only those that are approved by its “investment committee” to post a fundraising campaign. Companies that get the green light are able to post offerings of up to $1,000,000 to the site’s network of accredited investors. The limit is an artificial one imposed solely to focus the platform at the earliest stages of fundraising and could change at some point down the road.

Accredited investors, in turn, can use the site to identify and evaluate potential investment targets. As it stands currently, investors are limited to offering a “pledge” to invest, and Boost will not be completing transactions within its platform -- as a result of the uncertain status of the JOBS Act. Again, this may not always be the case. It’s likely that money will one day flow through Boost, but it will probably come exclusively from accredited rather than novice investors as is likely the model of other platforms.

This restriction aside, Boost already offers a truly unique service not currently available in the world of online startup and investor networking: social proof and curation.

Like it or not, there’s value in closed networks where both companies and investors must be vetted before being allowed to participate. One of the problems with existing platforms is that investors find themselves inundated with solicitations from startups, the majority of which do not pass a basic threshold of suitability. Boost believes that its approach will address this issue.

Once that hurdle has been met, for better or worse, the opinion of other investors within the system will have signaling effect on the attractiveness of any given company. The social proof signals communicated through investment pledges, as well as comments, could be enough to push an otherwise average deal into a bidding frenzy (or into the deadpool).

Perhaps the biggest thing Boost has going for it is that its founders had the stones to launch instead of waiting for the JOBS Act to crystallize. There have been an endless number of would-be crowdfunding platforms announcing their intentions in recent months, but nearly all have placed themselves in a holding pattern waiting for regulatory clearance. Draper and Boost, on the other hand, have taken the first step in choosing to use the premise of crowdfunding to build value within a highly curated community.

There are a lot of things that Draper and his team plan to implement in the future to improve the Boost platform. “This is version 1.0 of our product,” says Draper. “We have our ideas of how people will use it, but you never know.”

Among the things yet to finalize are the members of this phantom “investment committee” which will hold the keys to the fundraising gate. Also, Boost would do well to lay out the specific criteria on which it will be evaluating potential fundraising candidates. Investors will surely want to know that companies raising money are legitimate, but will not want to be restricted to those that fit within someone else’s investment thesis.

There’s a real chance that Boost will one day deliver on the promise of one-click crowdfunding. The technology and infrastructure are in place, according to Invested.in’s Goren. It’s simply a matter of the SEC catching up to the countless enterprising entrepreneurs chomping at the bit to get out of the starting blocks.

Draper had actually hoped to keep word of Boost quiet for a bit longer, until he seeded the platform with more companies and investors. In fact, it was his father Tim’s advice to do so. It’s ironic then that it was an excited Tweet by his father that let the word out and convinced him to share more info about what he’s building behind the scenes.

Boost isn’t the first financial venture launched by the young Draper. Adam has been quietly building investment bank and electronic alternative trading system (ATS) Xpert Financial since 2009. Through its broker dealer subsidiary Xpert Securities the company supports capital raising by established companies. In parallel, Xpert ATS is a secondary share exchange along the lines of SecondMarket and SharesPost that allows companies manage shareholder liquidity.

The difference between Xpert and Boost, according to Draper, is that Xpert plays in the realm of companies generating $10 million or more in revenue. Boost is all about early stage ventures.

“I feel like it’s my mission to support early stage companies and to see tangible ideas get an opportunity to succeed,” says Draper. In fact, Goren went so far as to call it his partner’s “crusade.” Adam has taken a step back from Xpert and will only sit on the board going forward, with all of his operational time dedicated to Boost.

According to several outsiders I’ve spoken to, Adam has deliberately done everything in his power to build his young empire without his famous father’s help, aside from support and encouragement. That’s not to say that the Draper name hasn’t added credibility and won’t be an enormous asset going forward.

In spite of his pedigree, and his obvious ambition, the success or failure of Boost will come down to the caliber of the investors and companies he can convince to use the platform, and the tools he can offer to facilitate transactions -- all of which remains to be seen.

The final thing that Goren dropped on me definitely caught my attention in a “meta” sort of way. “There’s a better than good chance that Invested.in will be raising a round through Boost one day in the near future,” he says, before directing me to his company profile page (below). “It’s also not out of the question that Boost could do the same itself, although we’ll have to see how that plays out.” If so, I think we may have discovered the singularity.

[Illustration by Hallie Bateman]