Fundr, launching its first portfolio, uses an algorithm to remove bias from investing
For all the ways that the Silicon Valley scene excels, diversity and inclusion is not one of them. But a new startup called Fundr is looking to do the heavy lifting to help investors diversify their portfolio.
Fundr is an investment marketplace founded by Lauren Washington, Boris Moyston, and Jean-Philippe Desmontils. The platform is aimed at angel investors, but available to institutional VCs as well, to do the vetting and due diligence across the startup ecosystem that angels don't always have the resources to pull off on their own.
Here's how it works:
Startups apply to the platform and share in-depth quantitative data about their market, team, traction, and background, which ultimately results in a Fundr score assigned to each company. This score determines how much that company is able to raise, or if they're even eligible to be on the platform to begin with.
Fundr then uses that information to put these companies in a diversified portfolio. In fact, Fundr recently announced its first portfolio of 15 startups out of more than 450 global applications.
Investors can then write a check to invest into that portfolio, with the ability to opt out of investing in certain companies or allocate more of their funds to their top picks. The goal is to raise $1.5 million and invest $100k into all 15 companies, with plans to close fundraising for this portfolio on December 11.
According to Fundr, there are more than 13.6 million accredited investors out there, only three percent are actively angel investing. Washington explained that the major barriers to angel investing are time, resources, and access to high-quality startups. Moreover, broad indexing at the seed stage usually outperforms individual investor selection by upwards of 90 percent over ten years, according to the company.
Within Fundr's first portfolio, ten industries are represented (including clean energy, AI, blockchain and fintech). Fifty-six percent of founders in the portfolio identify as underrepresented people of color, and 44 percent identify as female, with 75 percent of founders hailing from outside traditional tech hubs like Silicon Valley and New York.
Washington said that the company tested its algorithm at the Black Women Talk Tech international pitch competition this year, and correctly predicted the winner. It took a seasoned team of investors six hours to come to the same conclusion.
Fundr is bootstrapped save for $100,000 that it raised through Austin-based accelerator Sputnik ATX, and plans to first raise for its new portfolio before it raises more funding for itself.
You can check out the full list of startups in Fundr's portfolio right here.
