Europe’s angel ecosystem is growing — and so is the number of platforms designed to support them.
The latest to launch is Switzerland-based HackCapital, an investment platform for “small-ticket” investors in both startups and VC funds.
It joins several similar startups — such as London-based Odin, Carta-owned Vauban and Berlin-based Bunch — to “roll up” small-cheque investors and make taking investment from hundreds of people less of an admin nightmare.
HackCapital, which is specifically focused on the impact sector, also wants to make it easy for its users to sell their shares — transactions known as secondaries — so that they can reinvest back into the ecosystem.
Eventually, it also hopes to offer financing tools — like debt — to help its users get “from formation to exit”, HackCapital CEO Arman Anatürk, who is also founder of food tech community FoodHack and climate tech event HackSummit, tells Sifted.
How does HackCapital work?
HackCapital has several customer groups, including angel investors, founders and emerging fund managers. The platform can be used by accredited investors based all around the world — from Chile to Spain — and allows US and EU-based investors to invest together for the same cost.
Letting early investors cash out when they want to, before they get too diluted by big late-stage funding rounds, means they can invest back into the ecosystem, says Anatürk. That’s especially relevant for investments in climate tech and deeptech, he says, “where the innovation cycles take longer than the typical 10-year fund return”.
Secondaries are hard to do with a traditional special purpose vehicle (SPV), a mechanism typically used to pool investors’ capital. If one investor wants to sell their share in an SPV, they have to ask for permission from every other investor.
“Physically leaving an SPV is a big headache,” says Anatürk.
Instead, HackCapital uses a Luxembourg-based securitisation vehicle. “That means everything runs through one compartment, while all the risk is segmented. The debt agreement is with us; you own this many shares in X company via HackCapital.”
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That means for anyone to sell their share in a company or a fund, they just need a buyer, a seller and permission from the deal lead — typically an angel syndicate or startup — and to decide on a price. In the future, Anatürk says, HackCapital could organise auction events like those already run by private equity investment platform Moonfare.
No secondary transactions have taken place on HackCapital yet — but the infrastructure is ready, says Anatürk. HackCapital will take a 0.5% redemption fee on the share value of secondary transactions.
How does it work for fund managers?
HackCapital’s legal setup reduces the administrative burden and costs of pooling capital, says Anatürk — and should make it very price-competitive with its peers. “We’re on par with Odin and Vauban today, but we will be cheaper.”
It costs around €30k for an emerging fund manager to set up a fund on HackCapital — far less expensive than a traditional setup.
That’s because HackCapital’s platform will enable it to strip out many of the intermediaries — like lawyers and accountants — typically involved in setting up a new fund and processing transactions.
In time, HackCapital will fully transfer to a blockchain ledger — legal in Luxembourg since March — which will further bring down costs. It will also make KYC (know your customer) checks easier.
Why VCs need this now
It’s harder for VCs to raise money than it has been for years so taking investment from small-ticket investors is a far more interesting proposition than it used to be, says Anatürk.
“There’s been such a drop in interest in private markets, and climate funds have become pretty densely populated.
“Funds didn’t care about people like you and I before, now funds are looking for people like us… The pipeline of feeder funds is huge right now, so many are looking into this opportunity.”