Jaclyn Johnson and Angeline Vuong found themselves stumbling upon a startup idea while hiking to discuss how difficult it is for people to start angel investing.
Currently, they are co-founders of Cherub, a marketplace that connects angel investors and entrepreneurs.
Vuong spent nearly five years working on product and growth at Opendoor. Johnson founded Create & Cultivate, a self-described “media company for ambitious women,” where she has experienced both sides of the investment world as a founder and investor. Before starting her Create & Cultivate, Johnson sold her own startup (No Subject) in 2016 and invested in numerous companies, including her luggage company Away.
Johnson likens Los Angeles-based Cherub to Raya, an online dating community, in that it matches founders and angel investors based on their preferences.
“You can access the platform as an entrepreneur, or you can join the platform as an angel investor, and you can access both people and express interest based on tags,” she told TechCrunch. said in an interview. “So, for example, if I use an app and I'm interested in a woman-owned company in her CPG space that's doing a Series A or something specific, I'm looking for a superficial deal that best aligns with my thinking. You get the flow you're looking for.
Cherub allows investors and entrepreneurs to see who is interested in them on the backend. If they are interested too, you can indicate so and we will match. Conversely, if an investor approaches a founder but the founder does not see them as a potential fit, the investor can decline the invitation to connect. Or if the entrepreneur's minimum investment is her $25,000, but the angel investor only invests $10,000 per deal for her, they see that and reach out. I can not do it.
“In some ways, we're kind of using the dating app system,” Johnson said. “That’s why we jokingly call this the Raya of deal flow.”
Membership system
To test the Cherub concept, Johnson and Voung first launched a weekly newsletter last year, gaining 1,500 signups within three weeks through word of mouth alone.
Encouraged, the pair developed an Alpha product last summer that features about 40 companies and gives investors a way to request decks. All 40 people received requests for deck views, Johnson said. Half of these deck views resulted in referrals, with investors expressing interest in proposals from founders, she said. 20% of these referrals ended up being successfully funded within her 3 months, and in total she raised $1.1 million.
Of these deals, 40% were new angel investors. In other words, they were accredited investors who had never written a check before.
Cherub is currently in a slow ramp-up process with 100 startups generating $50,000 in revenue on the platform. There are 1,500 startups on the waiting list, with plans to grow that to 500 companies, Johnson said.
Image credit: Co-founders Jaclyn Johnson and Angeline Vuong / Cherub
Cherub is free to use for investors and charges startups through a membership model. A $480 annual membership allows founders to list their companies in the directory, which includes analytics such as the number of people who viewed their decks. Cherub Select membership costs $950 a year, and Johnson said there needs to be a more vetted process to more aggressively present the company to investors.
Johnson said Cherub also helps founders find incubators and accelerators, partnering with affiliated incubators for companies such as Andreessen Horowitz, Dream Ventures, and New York Fashion Tech Lab.
Investors will also have access to data such as “up-to-date information about a company's performance, whether it has raised funding, the amount of money, etc.,” Johnson said.
Of course, Cherub is not the only platform partnering angels and entrepreneurs. AngelList is the largest and best known. Israeli crowdsourcing company OurCrowd is another big company, but there are also offerings from venture firms like Hustle Squad's Angel Squad for accredited investors and Jason Calacanis' The Syndicate.
But Cherub is different in many ways, Johnson says. One of his features is startups focused on consumer packaged goods (CPG) companies. But it also includes AI companies, hotel projects, apps, etc.
AngelList is more of a B2B platform and is very tech industry-focused, which Johnson believes is best suited for people who already have knowledge and experience in startup investing and can afford to invest a significant amount of money.
Additionally, there are crowdsourcing sites like Wefunder and Republic that allow investors to invest small amounts, sometimes as little as $100, which Johnson describes as the “Kickstarter of angel investing.”
The angel sits in the middle, she says. For example, similar to traditional VC firms, the company hosts “founder and funder mixers.” Last year, for example, Cherub teamed up with Sofia Amoruso's Trust Fund to host a cocktail party where guests could “invest in everything in the venue,” including drinks and a “pop-up shop where guests could shop for anything.” This is a product I would like to try. ”
“That event alone generated over $400,000 in business,” Johnson said.
Angel investor Allen Orr told TechCrunch that he has used other platforms such as AngelList in the past.
“But it felt like it was too transactional and not a very personal experience,” he told TechCrunch via email. “What appealed to me about Cherub was the idea of a customized social approach to investing,” he says, “and I loved the opportunity to not only invest but also advise brands.” added.
Maggie Rose Makar, founder and CEO of mental health support app Zant, said her company was featured in one of the early editions of Cherub's newsletter and at one of Cherub's events. After meeting with investors in person, she said one investor wrote her company a check for $25,000. .
“I think Cherub does a great job of bringing aggressive investors into the same room as founders who are looking for them,” she told TechCrunch.
Cherub, unsurprisingly, raised $1.25 million on his own from angels including Drybar's Alli Webb and Blavity's Morgan DeBaun.