A local startup backed by serial tech entrepreneur Clarence Wooten will help investors in crowdfunding projects hedge their bets.
Founded last month, Asurvest
provides investment insurance for private and professional investors in Kickstarter and other crowdfunding platforms, CEO Luke Cooper says. The company will open an office in Baltimore over the next few months, hiring three to five analysts and marketing specialists.
Cooper says Asurvest is looking to partner with established crowdfunding platforms like Kickstarter.com
“These groups are highly visible. They attract investors. They have strong business models,” Cooper says, although exactly how the partnership would work has yet to be determined. “We are in an incremental improvement mode,” he says of Asurvest.
Cooper, Co-founder Sudhir Shandilya and Wooten have all invested an undisclosed sum in the company. Cooper's Baltimore investment firm Performant Capital Partners also backs the company. Cooper declined to say how much funding they have raised to date.
Wooten is a Baltimore native who is founder and chairman of social networking firm Groupsite.com
. He's known best for co-founding ImageCafe.com during the dot-com boom and selling it to Network Solutions/Verisign for $23 million. An advisor to Asurvest, he now resides in Silicon Valley and will launch a new company, Progressly Inc., in the middle of this year.
Crowdfunding is in its infancy, but growing rapidly. Recent federal legislation makes it permissible for private individuals to invest in crowdfunding platforms.
With that, however, comes a tremendous need for assurance that even small investors who spend $1,500 or $2,000 feel comfortable. "We seek to fill that need and to protect them from risk,” says Cooper.
Based on its proprietary statistical and risk management models, Asurvest says that it can accurately quantify certain kinds of business risks. It will provide default risk insurance at premiums that range from two to 20 percent of the initial investment. The founders haven't decided yet whether Asurvest would underwrite or broker the insurance policies.
Cooper says the company is still working out how it would operate for an investor. "There will be a cost for the investor, depending on the investment profile," he says.
Despite the federal legislation, states have their own regulations and Asurvest has to be licensed in each. Cooper is currently working with the state of Maine to draft legislation. He says the founders chose Maine as the starting state because it has a business-oriented regulatory environment.
He expects to get approval from Maine within the next few months. He will then turn his attention to Maryland, working with the Maryland Insurance Administration on the appropriate applications.
After Maryland, he says Asurvest “will look at where investors are coming from, what parts of the country, and pursue licensing in those states.”
Source: Luke Cooper, Asurvest
Writer: Barbara Pash