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When my co-founders and I started Equi, we each committed to putting 80% of our liquid net worth into the investment platform we were building.
It made sense because we had initially built the product for ourselves. We knew what investment strategies would yield the best returns on our savings, but without $100 million in the bank and a family office to manage the funds, leveraging these strategies was impossible.
We also quickly learned that the major banks and private wealth advisers really didn’t have much when it came to great alternative investments. They all had the same big brand names, but they didn’t deliver the performance to back it up.
Our current target customers are “accredited investors,” who represent about 10% of households in the U.S. These investors also represented 100% of the institutional and angel investors we were in conversations with when we went out to raise our seed round earlier this year.
Since our future business partners also fit in our target customer demographic, we asked ourselves: What if we required our investors to take the same bet on our product that we did?
We were inspired by Vanguard, which pioneered the model of collective ownership to drive lower expenses for their funds. They chose to raise money from their customers so they could be owned by their founders, employees, and customers rather than taking capital from passive investors.
Vanguard successfully aligned incentives between their shareholders and customers, and we decided to do the same. Our “Customer Pledge” is a commitment to invest personal capital on the platform now or within the next two years.
Our $10 million seed round closed with hundreds of investors on the cap table. Partners at funds like Foundation Capital, Hustle Fund, Montage Ventures, F7 Ventures, Gaingels, and Calm Ventures, as well as over 100 angel investors, took our Customer Pledge.
While we could’ve closed the round with a fraction of these many investors, we decided to take smaller checks from a greater number of people to gather as much feedback and input as possible. We also reserved 25% of our fundraise for groups underrepresented in VC, so that input would be diverse and varied.
This paid off. Our shareholders showed an unparalleled level of engagement. They’ve been through the onboarding experience, they’ve used our product dashboards, they’ve received our marketing emails, and they’ve interacted with our customer support.
Because they’re technology leaders – and many previously built or ran successful companies of their own – their feedback has been even more invaluable than I anticipated. Not only can they identify and clearly articulate issues, but they can also use their expertise to proactively brainstorm solutions and solve problems.