Four entrepreneurs are preparing to launch edgeyo, an investment marketplace for start-ups and investors, on Christmas Day.
edgeyo falls under the banner of Pressyo, a social news website owned by four entrepreneurs including Sydney-based economist Xuanyi Chew and Darrel Chua, based on the Gold Coast.
The other founders, Ruben Tan and Simon Lim, are based in Kuala Lumpur, although Tan also spends time in San Francisco and Vancouver.
“As an economist, it was quite clear with the trends in the years 2007-10 that [the] market for start-up funding is unraveling,” Chew says.
“[We] thought this was a good opportunity to perform a market experiment. More importantly, we felt that there was a need to democratise funding.”
“Crowdfunding was one way but there was just something off about crowdfunding for us – at least from an elegance point of view. So we sat down and designed a mathematically elegant system of funding start-ups.”
The result was edgeyo, which Chew describes as a balance of democratised and preferential funding.
This means all participants in the system can provide input on the quality of the start-ups being funded, while also taking into account the personal preferences of investors.
“We are also very inspired by the concept of lean start-ups… The idea was that hypothesis-testing was king,” Chew says.
“Start-ups should build a build-measure-learn cycle, and change the direction of their businesses according to what they’ve learned.”
“Likewise for the investors who sign up – they need to commit to a similar lean funding principle.”
edgeyo works by asking investors at the beginning of each month to pledge a minimum investment of $25, while start-ups must indicate how much equity they wish to give up (less than 1% in total).
Every day, investors receive a list of five start-ups within the scope of their preferences. They are required to rank these start-ups based on what they think is best for their portfolio.
Start-ups also receive a daily list of five investors within the scope of their preferences, also ranking these investors based on what they think is best for them.
Start-ups are also encouraged to update their status on the lean cycle, including what they have built, measured and learnt. This information is then shown to investors.
At the end of the month, there will be enough data to find the best investor-start-up matches.
Each investor will be presented with the five best start-ups. They will then determine how much money, if any, they want to invest in each of their algorithmically-derived best matches.
Interestingly, the founders are planning to launch the platform on Christmas Day, with Chew insisting it is an ideal launch date.
“It is a holiday, so we will weed out people who are not interested enough to sign up for Christmas,” he says.
“If people are interested enough, they will surely spend five minutes outside family gatherings to check out what edgeyo does.”
The founders plan to grow the platform on an international scale because “we believe funding should be free-flowing and devoid of borders.”
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.