Is it possible to buy startups through a smartphone app and will this become popular among the middle class?

Alexander Dresen created both a dating service and a social network. The projects generated income, but did not become either the new Mamba or the new Facebook - the Russian programmer lost these battles. Now he wants to combine his work and create a mobile club for venture investors.

I went into the application, looked at startups, discussed them with partners, and invested money in the one I liked: now you can become an investor without letting go of your smartphone.

“What do you do if you have $10,000 to spare? You take them for deposit or invest them in friends’ projects,” says Dresen. “It’s not interesting and potentially not as profitable as investing in fast-growing companies.”

How did the entrepreneur come up with this idea and why is he confident that investors will use the application?

Lost my grip

In 1999, Dresen was writing a budget planning program for a Pringles chips factory in the Netherlands, but he was interested in something else: services that could connect people. Therefore, in parallel with work and study, he creates Place.to.be, one of the first chat rooms in the Benelux countries. During the first year of operation, the project became quite popular and brought the programmer his first million dollars after its sale to Headtrick.

Having earned money, Dresen quits his studies at the University of Brussels and focuses on his projects. By 2003, he and fellow physicist Sergei Kalachev developed Looknmeet. “It was the first social network in Belgium, somewhat similar to MySpace,” says the programmer.

On the site you could create your profile and send messages to other users. The portal started bringing in money almost immediately, because messaging was carried out through paid SMS. The company's annual turnover was €2 million. The number of active users a year later exceeded 300,000. But in 2006, Facebook entered the European market.

Dresen's website quickly lost its audience. “When you spend a long time working on a successful project, you lose your grip,” explains the entrepreneur. “We realized too late what was happening and did not have time to reformat.”

After Looknmeet, Dresen decided to publish a men's fashion magazine in the spirit of GQ. The magazine started well and accumulated an audience of 20,000 subscribers. But the 2008 crisis changed everything. “I had investments in real estate, stocks, and the magazine’s advertising revenues had plummeted,” says Dresen. “We had to start over.”

Miscalculated with the idea

After the crisis, Dresen, together with Kalachev, returned to the Internet business. Together with Belgian programmers, they are developing the Zingl dating service, which was planned to be launched on the Russian market. The Zingl user indicated their social media accounts, preferences and interests, and the site quickly found a “match” suitable for the user.

The project won the startup competition of the European accelerator SEEDCAMP. In January 2011, the company received an investment of $600,000 from the American venture capital fund Atlas Venture. But the project failed.

“Our partner Rambler did not provide us with a sufficient number of visits, which is critical for dating services,” says Dresen. “Moreover, the very idea of the project was wrong. It turned out that people do not want to quickly find a mistress or lover. They want to spend a long time on the pages of the site searching, wondering whether a person is right for them or not. This is a separate hobby, not a search for dating.”

After the failure, Dresen decided to do something for the venture capital community. This is how he explained the appearance of the Angie mobile application in February 2014. Ilya Rudometov, the leading iOS developer of the Mail.ru Group holding, was involved in the project.

“I’m a big fan of the Angellist project,” says Dresen. “I asked its founder, Naval Ravikant, if I could build a mobile application, and he agreed.” Angellist is one of the largest startup marketplaces in Silicon Valley, with over 30,000 companies listed on its site. Any of them can attract funding from angel investors by introducing themselves and arranging meetings online, as well as looking for new employees. Investors can follow the deals of competitors and join them, forming small clubs.

Angie, being an independent project, not only transfers the functionality of Angellist to a smartphone, but also allows you to invest in projects directly from your mobile device - using a digital signature.

More than 30,000 people have already downloaded the application. According to Dresen, about half of them actively use the application.

Startup as a lover

While working on Angie, Dresen noticed that there was a lack of information among potential investors about how and where to invest money. In addition, Angellist’s functionality was tailored to Silicon Valley, and the platform remained inaccessible to European and Asian companies. So Dresen decided to create his own online club for venture investors. The project was called Kown.

There are dozens of offline venture clubs operating in Europe and the USA, but they work very slowly - it can take six months from a startup filing an application to receiving money. “Unlike dating, timing is of the essence in venture capital,” says Dresen. “Social networks have appeared for distribution and advertising of their product, startups raise a round in a month, and if you did not invest in it in the early stages, and its business has taken off, they will no longer let you in.”

For a subscription fee of €300 per year (several less than in offline clubs), a Kown member gets access to investing in startups. Companies aggregate from all well-known European startup platforms and social networks, after which the selection of projects is carried out by the service team. You can also invest from your smartphone. In addition, investors can communicate with each other, just like on a social network.

Dresen’s team failed to raise money in Russia.

But the Bulgarian startup accelerator Eleven allocated €100,000, but with the condition that the service must move from Moscow to Sofia. I had to agree. There are currently 11 people working on the project.

Closed area

The club is not yet open to everyone. At the testing stage, Kown has 82 investors who were invited by the developers themselves. They have funded four projects, including Kown itself, which raised $300,000 to open an office in San Francisco. The club selects small projects in the IT field with a capitalization target of $50-80 million.

One of them provides technology for media that determines the effectiveness of authors. Another connects European farmers with city dwellers who want to buy food. Club members have already begun to form pools based on their interests, Dresen says. For example, Bulgarian investors were looking for partners to invest in medical startups and found support in distant Japan.

On average, Kown members invest in one project from $1,000 to $5,000, but if desired, the amount can be higher - there have been transactions for $50,000.

“We analyzed how successful investors behave on our Angie app,” Dresen explains the strategy. “Since it is impossible to predict the success of a startup, they make small investments in many companies.”

In terms of risk level, they can be compared with bets. If one of the companies begins to grow, the investor has already prepared the ground for increasing his share in the project.

A hierarchy will be built in the club. Professional investors invited by developers or who already have experience investing through the application will see new startups before ordinary users. “In this way we want to protect unprepared investors from risk,” explains Dresen.

According to him, Kown has nothing to do with crowdfunding sites. “They earn on commissions from the money raised, but we are interested in investors earning money on investments,” explains the entrepreneur, who himself invested in projects through Kown.

The idea of the club is to make venture capital investments more accessible to the middle class.

Dresen expects to attract several thousand new members within a year. For startups, club investments also came as a surprise: “Usually companies hope to get large companies as shareholders, although they do not realize that literally their neighbors would like to invest in projects and be involved in something interesting.”

Venture from a smartphone: why Russian programmers are creating a mobile investment club