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Can N2 turn VC funding into an algorithm?

The new platform is designed to digitalize the capital-introductions process for VCs and startups.

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Derek Watson, N2

For startup founders, a necessary but usually painful part of the job is raising financing. Finding investors can take one or two years, while the founder and their team are meant to be building the business.

The money slog doesn’t get easier, either. The nature of VC-financed startups is to operate on milestones, with each achievement meant to pave the way to yet more funding at a higher valuation.

N2, a Dubai-based startup, has built a platform designed to help startups source funding more easily – and to aide venture capitalists in their quest to find the right opportunity.

“Startups find the process can involve hundreds of pitches and a lot of middlemen. Investors, meanwhile, find themselves struggling to make sense of lots of data,” said Derek Watson, co-founder. “The promise is to open opportunities to startups beyond those in Silicon Valley and Israel.”

Funding by algo

His firm has designed an algorithm to categorize both startup and investors. VCs can search for companies based on an investment thesis, a technology, or a marketplace; they can distinguish between experienced entrepreneurs and first-timers; or look for niche categories such as a sharia-compliant fintech, or a woman-led business.

Startups, meanwhile, can do some due diligence on potential investors to see who might be a good fit. And they can use the platform to educate the market about their business: do they have a minimum viable product, revenues, strategic customers?

“It’s a digital warm handshake,” Watson said. “If there’s a match, the parties can then do a deeper dive.”

He says N2 charges a $800-per-search charge to startups, but no other fees: it is not a crowdfunding site, but a cap-intro service. As he builds a userbase, Watson says he’ll look to build a subscription service, one for VCs and another for startups. Those subscriptions will gradually be augmented by data analytics on industry trends.

Although the service launched in the Middle East, since December it has opened to global startups, running from seed investments to Series B rounds.

Watson says the firm now has about 650 startups and 1,300 investors on the platform. Of those investors, 400 are “qualified”, meaning they have capital ready to deploy now, and about 50 represent corporate venture. He says larger VCs like the platform because it fills in gaps; onboarding firms that may be dominant in a local market has been a harder sell.

The company plans to add service providers such as lawyers to the platform as well.

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Can N2 turn VC funding into an algorithm?