Propel(x) Review: Invest in Impact Startups That Can Make a Difference

Propel(x) is a high-end crowdfunding platform that lets accredited investors buy stakes in deep tech startups. They offer impact investments in the energy and green technologies space, among other deals. Learn if you should invest through Propel(x).

SustainFi   Updated March 10th, 2022

Investment TypeVenture
Minimum Investment$5,000
Fees2.0%+
Non-Accredited InvestorsNo
ESG OptionsMany investments have an impact theme

Pros

  • Access to deep tech investments alongside top VCs
  • Highly vetted investments
  • Low minimum investment for the asset class
  • Personalized assistance from the investor relations team
  • Transparent investment terms
  • Self-directed IRA investment options

Cons

  • Must be an accredited investor
  • Investments are risky and illiquid
  • Few options available at any given time
  • High fees if investing through Syndicates
  • Deep tech may be hard to understand for some investors

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What is Propel(x)?

Propel(x) is a crowdfunding platform that lets you invest in highly vetted science and technology startups alongside top-tier VCs. They focus on six key sectors:

  • Energy & Green Technologies
  • Aerospace & Transportation
  • Life Sciences
  • IT & Communications
  • Industrial Technologies
  • Food & Agriculture

Many of the investments can truly be described as “impact investments” because, if successful, they can make a difference in the world.

Propel(x) was founded in 2014 by the co-founders of the MIT Alumni Angels angel group. Investors include individuals, family offices, and funds. Propel(x) portfolio companies have cumulatively raised $1.5 billion from investors, including Propel(x).

What can you invest in on Propel(x)?

Propel(x) features startups from early-stage (Series A) to late-stage (Series D and later).

Unlike crowdfunding platforms like StartEngine that list tons of startups, the Propel(x) team carefully selects the deals on the platform and lists a few at a time. They source investments through their network of Silicon Valley angels and VCs. The startups they feature have raised from VCs like Softbank, Founders Fund, and Dreamit Ventures.

Propel(x)’s subsidiary, Hubble Investments, does extra diligence, focusing on business and financial prospects. Conclusions are made available to investors.

For a startup to be accepted by Propel(x), it must meet the following criteria:

  • Be a “deep tech” startup, meaning that it’s founded on scientific discovery or engineering innovation
  • Fully own its intellectual property
  • Have a prototype or significant experimental data to support the thesis
  • Be connected to reputable incubators, research institutions, national labs, or other networks

Propel(x) investment terms

You can invest in a startup directly or as part of a syndicate.

Syndicates pool funds from several investors into a single Limited Liability Company (LLC). The Syndicate invests together, appearing as a single investor on the startup’s capitalization table. The benefit is that you can start investing with only $5,000. As a result, you can create a diversified startup portfolio, as opposed to putting $25,000 or more into a single deal.

Minimum investment

If you are investing through a Propel(x) syndicate, there is a $5,000 minimum. If you choose to invest directly, the startup will set the minimum, which will likely be much higher than $5,000.

Platform fees

If you invest in a startup directly, you need to pay a 2% platform fee.

Syndicate investments are subject to a one-time 7.5% platform fee and 10% carry upon exit, i.e., if the investment earns a return, you will give 10% of the upside to Propel(x).

How does Propel(x) make money?

Propel(x) makes money through platform fees and carried interest described above. In addition, they charge startups a success fee of 5%-8%, depending on the amount raised.

Because Propel(x) shares in the profits if you invest through a Syndicate, they are incentivized to pick startups that will do well.

Impact investing options on Propel(x)

Many startups on Propel(x) can be described as impact investments, letting their investors make a difference and get a potential return. Closed impact deals include:

  • Repurpose Compostables. Repurpose makes plant-based compostable products as an alternative to disposable plasticware
  • SkyCool Systems. SkyCool Systems has developed a passive cooling panel. When connected to traditional air conditioning and refrigeration systems, SkyCool panels can help reduce energy use around the clock
  • Tandem PV. Tandem PV is working on the next generation of solar panels
  • Liatris. Liatris aims to deliver energy savings for businesses by mass producing thermal insulation that is easy to install, highly efficient, and non-toxic
  • True Algae – TrueAlgae is a biotechnology company that manufactures bio-fertilizers 

To view what’s currently available, you need to register first.

How do I invest?

For regulatory reasons, you need to confirm your accredited investor status before you can view any investments on the platform.

How do you know if you are accredited? To qualify, you must earn $200,000 a year for two years ($300,000 as a couple) and expect to earn the same this year or your net worth must exceed $1 million, excluding your main home.

As an accredited investor, you can browse startups, request access to deal evaluations, ask questions, and, of course, invest. You can even invest through a self-directed IRA.

Aside from reviewing the information available in the startup profile, investors can request access to restricted information such as the pitch deck, investor calls, and documents related to intellectual property. Access to these materials is typically granted within 24 hours. The restrictions are there to protect the startup’s secret sauce from potential competitors.

Because Propel(x) investors tend to be higher net worth individuals, their team also offers personalized assistance.

Is Propel(x) safe?

Propel(x)’s subsidiary, Hubble Investments, is a broker-dealer and member FINRA/SIPC.

However, investing in startups is highly risky. Most startups fail, so you can lose your entire investment.

Besides, there is likely no way to exit your investment early, and most startups now take 7-10 years to exit. You could, in theory, sell your stock privately to another accredited investor after a one-year lockup. In practice, buyers may not be easy to find, especially if the business is not hitting its metrics.

Overall, investing in startups is a tool to diversify your portfolio when you already have a solid base of liquid investments like stocks and bonds.

💰 Should you invest with Propel(x)?

  • Propel(x) is an innovative platform letting accredited investors co-invest in impactful, deep tech businesses alongside venture capital. It is one of the few platforms that carefully curates the deals it lists.
  • However, you should always remember that venture capital is highly risky, and your investment will be locked up for many years, even if ultimately successful.

🔔 Interested in other platforms that let you invest in startups? Check out our green startup crowdfunding guide.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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