Vetting Startups And Preparing For Fidelity’s Crypto Trading Service

Q: How much due diligence do equity crowdfunding sites do before listing a fundraising round?

A: It varies… more widely than you think.

I was just on the phone this week with a portal executive. This portal basically lets anyone who fills out an application and jumps through the required hoops list on its site. So the quality of its offerings varies widely.

The majority of the portals we work with take a more thorough approach. It’s the system I prefer. They make sure the companies are legit. The make sure the founders are NOT bad actors. And they look at startup decks to determine if they’re compelling investment opportunities. Some portals claim they turn away 98% of applicants. Some portals even reject startups they rate highly if they believe the company’s valuation is too high.

We really appreciate everything these portals do to make quality startups available to us. It’s not an easy job, and they do it very well. Our favorite portals, in no particular order, are Republic, Netcapital, SeedInvest, MicroVentures, Wefunder and StartEngine.

When browsing startup portals, I suggest you read the Q&As between readers and founders. They have a lot of useful information.

After the portals list their vetted startups? That’s where we come in. And we vet some more.

A big part of that process is talking to the founders. You can get their basic story from the portals. But we prefer to grill them with a few dozen additional questions. This allows us to draw our own conclusions.

Remember, not all the startups that are listed on these sites are created equal. Some are better than others. And some are much better than others. Those are the ones we do our best to identify for our First Stage Investor members.

+ Early Investing Co-Founder Andy Gordon

Q: What’s going on with Fidelity offering crypto? Can I buy it in my retirement account?

A: Fidelity is offering cryptocurrency trading services through its new division, Fidelity Digital Assets. Starting out, it’s targeting “institutional” investors only. So the target market is professional investment firms (pension funds, endowments, wealth managers, etc.).

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