The University of Missouri’s Allen Angel Capital Education Program has decided to invest $50,000 in Knoda, a Kansas City-based startup that has developed an application that allows users to make social predictions.
The investment program was founded in 2011 with a $50,000 Kauffman Foundation grant and gives students the opportunity to work as angel investors. Each year, the program allows 15 to 20 students to manage real assets. The fund has grown to $600,000 following a $500,000 donation from the Allen family and other various donations from alumni and companies.
The students first met the founders of Knoda during a trip to Kansas City startup accelerator SparkLabKC last fall.
The Knoda application allows users to make predictions such as sporting event outcomes, award winners and technology usage. The application uses crowdsourcing to determine if the predictor wins or loses, adding a social function to the application.
The company was inspired by a prediction one of the co-founders made with his mother but couldn’t prove. The application was created as a way to hold users accountable for their predictions.
MU faculty adviser W.D. Allen said Knoda stood out from other apps presented to the student investors in the past.
“Knoda was the first (app) we came across that had not only good entrepreneurs but a good product,” Allen said. “It was unanimous among the students that we invest.”
After the initial meeting, the Knoda founders presented to the program’s class. The students then intensively researched and analyzed the company before deciding to invest.
Curtis Strubinger, a graduate student and co-managing director of the investment program, said he was impressed with the tenacity and drive of the company’s founders. He said the product was also novel and fun.
“We got to try it out and we just loved it,” Strubinger said. “We thought it was a great idea and they had a good sense of the market.”
The student group’s investment is in the form of a convertible note, Allen said. “Later in the firm’s life when it attains enough size and value, it converts to an equity position,” he said. “This is very popular with very young start-ups.”
The program previously invested a combined $100,000 in Columbia-based biotech companies, Elemental Enzymes and Eternogen. Knoda is the only company that will receive investment from the fund this year.
Kyle Rogers, Knoda co-founder and chief executive officer, said the company plans to use the money for operational expenses, including the salaries of developers.
“We were really pleased to be able to work with the students and be part of their learning process,” Rogers said. “And the extra benefit obviously for us is to have some added funds to expand the runway of Knoda and keep working on our project.”