In my last platform spotlight post, I delved into the response collection phase of the evaluation process and how investors like you can actively stay on top of management responses as they come in. But what else can you do to be a proactive investor? After all, we at Propel(x) are firm believers in the power of networking. So here’s how you can help us find quality outside opinion leaders to weigh in on a startup’s science and tech and referring an expert. The complete triangle requires unbiased assessments from third-party experts in order to function properly.
What does it Mean to Crowd-Source Experts?
From our team’s collective experience in VC, PE, investment banking, and management consulting, we know experts are hard to find. Asymmetry of information is a major issue– recruiting firms spend a lot of time sifting through and making hiring decisions based on self-reported expertise. Since hiring is done on a “parachute in” basis, no one really aims for a perfect fit in these situations. And, as a result, end up incurring thousands of consulting fee dollars on experts who are too senior, high-level, and removed from practical, up-to-date knowledge.
There is a better way. Crowd-sourcing experts goes a long way in addressing the major obstacle of finding experts and we invite our community of investors to help identify experts from their network in an evaluation process they are participating in:
- As an interested investor, you may know people in your networks that possess relevant expertise and knowledge and you can share your network in the aid of other angels and to fund worthy startups. And you are recognized for this effort and you as the referrer will be listed for your fellow investors to see — and thank! As a potential investor deciding whether to write that check, your are motivated to make the evaluation process as thorough and as informative as possible? Let me ring up a critic to help me kick the tires.
Paying it Forward
It’s the pay-it-forward spirit at the heart of Wikipedia, Quora, StackOverflow, and many other highly-respected user-generated-content (UGC) sites that is the driver behind our evaluation process — angels like to help other angels and they want to identify the startups worth investing in. It’s also great for the expert you refer. Responses from experts are viewable by potential investors, giving them an opportunity to stay on the cutting edge of their fields, make industry connections, socialize virtually, and gain bragging rights in a vibrant entrepreneurial and angel investing community.
At the end of each evaluation process, Propel(x) also introduces third-party experts who contributed insights so that they can network further if they choose. Our team is also hard at work developing a vote / reward system so that experts with the most number of helpful votes get cash and other prizes! Stay tuned for further developments here.
Referring an expert is a snap on Propel(x) – you can follow along in the below screenshot
- The All-Important (and much appreciated!) Referral: Click into the Evaluation Tab associated with each deal. Under the expert section you can add the name of your referral(s) and their contact information. You can also include an optional personal message if you’d like. From there just click the button that says REFER. Your work is done!
- Startup Review: The startup that is being evaluated is then notified and gets to review your contact’s credentials. If they feel that your referee is an expert in their field, then they approve and the expert is invited by Propel(x) to take part in the Evaluation Process. Expert referrals not approved to participate will simply not get invited.
- Expert Weighs-in: Once the expert agrees to participate, he or she will receive an email containing basic information about the startup, its pitch deck, other technological details, and most importantly, a link to investor questions. The questions do not have to be completed in one sitting – past respondents spent between 2-5 hours working on draft answers before submitting.
Investors can refer experts during both phase 1 and phase 2 of the evaluation process – but we encourage all referrals to be done as soon as a deal’s evaluation kicks off. We want to give all respondents plenty of time to answer the questions!
Should Startups Worry about Irrelevant Experts Being Referred?
A very valid concern for startup management is whether their science and technology will be assessed by individuals whose unqualified opinions will lead potential investors astray. To counter this problem, we give the ultimate “veto” power to the startup.
As soon as a third-party expert is referred for an evaluation process, this expert’s name and public professional information (usually a LinkedIn url) will be sent to the startup management for their vetting. After all, not all astrophysicists are the same, and startup management wants to look for specific areas of expertise and industry experience, as well as potential conflicts of interest that may arise from connections with a competitor. Once the startup management approves an expert as a participant, however, they will not be able to censor any insights this expert may share. We do give startup management the “final say” via the ability to respond to any expert insights they believe require further background or clarification.
A Due Diligence Process for the 21st Century
It’s our goal at Propel(x) to increase the funding in innovative science-based companies by overcoming the knowledge gap that exists between startups and investors. We have a secret weapon in the power of our platform. By engaging you — our knowledgeable, vibrant and global community in the evaluation process – we can quickly assess, identify and invest in the great companies of the future.
Next Time, the Big Pay Off – Results!
Now that the respondents – including experts referred by investors like you – are hard at work answering questions, you can sit back and wait for the pay off. Next time, we will get into what happens in phase 3 – when evaluation is complete and the full results become available.