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Friday, April 12, 2024

Need an Angel Investor? Just Open Up Clubhouse

Startup fundraising can be blood sport, which also makes it great entertainment. Shark Tank first brought pitch decks to prime time in 2009, spawning an entire genre of investment-as-reality-TV. To name just a few: Meet the Drapers (hosted by venture capitalist Tim Draper), Cleveland Hustles (hosted by basketball legend LeBron James), Entrepreneur Elevator Pitch (exactly what it sounds like), The Profit (weirdly, for investing in failing businesses), Dragon’s Den (like Shark Tank but British), and Tigers of Money (like Shark Tank but Japanese).

The latest entrée on this theme is not on television but on Clubhouse. Every Wednesday at 3 pm Pacific time, a new handful of founders duke it out before a panel of angel investors in a weekly show called Angelhouse. Hundreds more people listen in. The conversations between founders and investors can be educational, but “the purpose of hearing pitches is not to give advice,” says Geoff Cook, one of the angels. “It’s to decide: Do you want to invest or not?”

From the start, Clubhouse has had a vibrant startup scene, and many of the app’s top users are venture capitalists. It’s not uncommon to stumble into a room full of entrepreneurs practicing their pitches, or investors discussing the latest startup trends. Cook, who founded his first startup as a freshman at Harvard in 1997, has sold several companies and now dabbles in angel investing. After spending some time on Clubhouse earlier this year, he realized it might be a good place to find some new deal flow. He asked a few other angels he knew if they wanted in, and in January Angelhouse began.

Every week, Angelhouse invites four founders up to the stage. Most of the participants have submitted an application form ahead of time, but the show will occasionally pluck a volunteer from the audience to pitch on the spot. There are no slide decks or B-roll footage on Clubhouse. Instead, it’s an hourlong exchange between founders and the investors probing their ideas, including the sometimes boring particulars: technical specs, cash flows, distribution models. Afterward, the angels—who are scattered around the world—retreat to a private back channel on Slack, where they chat about which, if any, pitches are viable investments. They invite their favorites back every fifth week for the Money Show, where they decide which they want to invest in. No one “wins” Angelhouse’s Money Show; sometimes, no one gets picked. There is only one gimmick: If one angel writes a check, they all write a check.

For founders, the process can be surprisingly efficient. Without the right network to make introductions, getting the attention of an angel investor can be about as easy as finding a fairy godmother; on Clubhouse, there are rooms full of them, and Angelhouse offers a straightforward way to snag a meeting. For angels, it can also help build new connections that lead to new deals. “In my previous angel investing, it was always someone I knew through someone, or someone I knew directly,” says Cook. Now his network is as big as Clubhouse’s user base.


On Angelhouse, each angel invests a minimum of $10,000 and a maximum of $50,000. That’s smaller than the average angel check, but because the group invests together, it takes some of the pressure off the individual angels without shorting the founder. So far, the investors have blessed two startups from the show: Alpha'a, a blockchain marketplace for art, and Stack Influence, a platform that connects micro-influencers to brands. Manuela Seve, the founder of Alpha’a, simply showed up in the Angelhouse audience and raised her hand to pitch. The angels liked what they heard, brought her back for the Money Show, and decided to invest. “The next day, I did another pitch in another room [on Clubhouse], and it led to another investor that we’re now talking to that might lead the round,” says Seve. “I told my team, ‘I just raised $50k in a two-minute pitch!’”

William Gasner, the founder of Stack Influence, has made Clubhouse a significant component in his fundraising strategy, He has experimented with other rooms on the app, like Pitchhouse (where he pitched but did not get an investment) and Baby Shark Tank (where he made it to the final round but won only $300). His team even built a tool that tracks when one of their desired investors appears in a Clubhouse room. “It sends a notification on Slack, so then I can quickly open Clubhouse and try to have a conversation with them,” says Gasner. The approach requires being ready to pitch at any time, with just a moment’s notice. “Sometimes a room starts just before I go to bed, and I might raise my hand and pitch under the covers. I pitched once in a grocery store.”

Altogether, Stack Influence raised a $750,000 round in less than a month, largely from investors on Clubhouse. After Gasner’s appearance on Angelhouse, another investor who had listened to the show also offered to invest. “That’s a cool advantage to Clubhouse,” says Gasner. “You don’t know who’s going to be listening.”

Seve says the speed of transactions makes hanging out on the audio app worthwhile. “For anyone who’s ever raised money, it can take six months or more, just going back and forth with angels, who at the end might not even invest,” she says. “But for all of these investments that came from Clubhouse, it was pretty much just sharing the diligence folder after the conversation, and then getting the wire.”

On a recent Wednesday, four entrepreneurs appeared onstage for the Money Show. Any nervousness was concealed behind their digital avatars. Their companies covered a wide range: a marketplace called NextUpRecruitment that connects college athletes to scholarship opportunities; SpeedLegal, a tool that decodes legalese in contracts; an AI education platform called Socrates; and Digibuild, “construction software powered by blockchain.”

Each founder gave their spiel, then accepted questions from the panel. Was this really a venture-scale business? What were the current engagement levels, the current distribution models? What milestones did the founders want to achieve with this round of investment?

As the clock neared 4 pm, the angels went around to give feedback. In the end, none earned an investment (though Cook says the angels have kept a conversation going with the founder of Socrates). It would’ve made for an anticlimactic end to a game show. But for Cook and the other investors, this isn’t a game. A check from Angelhouse is the real deal.

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