AngelList Explained: How It Works and Its Impact

AngelList is a platform that connects startups with investors, making it easier for them to raise funds. Founded in 2010 by Naval Ravikant and Babak Nivi, AngelList has become a go-to place for startups to find investors and grow their businesses.

AngelList allows startups to create a profile, showcase their team, and pitch their idea to potential investors. This helps startups get noticed and attract investors who are interested in their project.

With over 200,000 startups listed on the platform, AngelList has become a hub for startup growth and investment.

AngelList was founded in 2010 by Naval Ravikant and Babak Nivi. They started by listing 25 investors who would share interesting companies to invest in.

The idea for AngelList was born out of the Venture Hacks blog, which aimed to increase transparency in the VC world and bring the startup community together.

AngelList was initially conceived as a simple list of angel investors online, which was announced in 2010 with the subscription of 50 angel investors who intended to invest $80 million that year.

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AngelList was founded in 2010 by serial entrepreneur Naval Ravikant and Babak Nivi.

The initial idea for AngelList came from the Venture Hack blog, which focused on entrepreneur financing. Naval and Babak used the traction from the blog to create a list of 25 investors who would share interesting companies to invest in.

In 2010, AngelList was announced with the subscription of 50 angel investors who intended to invest USD $80 million that year.

AngelList was initially created as a way to connect entrepreneurs with angel investors, and it quickly gained traction.

The company's founders, Naval and Babak, were motivated by the need to increase transparency in the VC world, which is why they started the Venture Hack blog in the first place.

In 2022, AngelList Talent was spun out as a separate company and rebranded as Wellfound.

Naval Ravikant was a key player in the creation of AngelList, and he played a significant role in shaping the company's early years.

AngelList's involvement in the JOBS Act in 2012 helped to ease securities regulations in the United States, making it easier for companies to raise capital.

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AngelList is a one-stop-shop for startups, offering a range of features to help them grow and succeed.

The platform allows users to create a startup profile, which can be used to raise funds, find talent, and promote their brand.

With AngelList, startups can also create a syndicate, which allows multiple investors to pool their resources and invest in a startup together.

This feature makes it easier for startups to raise funds from a larger group of investors, increasing their chances of success.

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AngelList is a platform that allows you to invest directly in startups, with a median investment amount of $25K per individual angel. This is a significant reduction from the traditional investment amounts of $5K to $100K.

To get started on AngelList, you need to be an accredited investor, which means you need to be well-off but not necessarily wealthy. This is a requirement that was in place even before AngelList expanded its services.

The platform offers a range of features, including job boards, social networking, recruiting, and promotions for new products and services. But the core feature is its ability to connect investors with startups that are looking for funding.

Angel investors typically build a group of backers, who are fellow angel investors that they share investment opportunities with. This allows backers to rely on experienced and reputable angel investors to discover and vet quality opportunities.

Backers get to cherry-pick the deals they are investing in and build their own portfolio allocation. They are also aligned with the syndicate lead, who is also investing and risking their own capital.

One of the benefits of being a backer is that you are not charged upfront fees. Instead, you pay a share of your future profit, known as carry, if any. This is a more favorable arrangement than traditional investment methods.

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I used AngelList as an alternative to investing in the public markets because even back in 2014, the S&P 500 seemed expensive.

I was attracted to the idea of helping companies grow and potentially earning well above what the public markets could offer.

As a conservative investor, I had previously been hesitant to put much into the markets due to several crises in the early years of my business.

I started investing in both individual companies and funds, such as the Consumer Fund I and Enterprise Fund I.

Joining syndicates, groups created by individuals who invest in many startups each year, also became a viable option for me.

Syndicates invite you to invest in individual deals, and you can join or pass on each one, which I found to be a useful feature.

As of 2020, it looks like almost everything on the platform has moved to syndicates or funds, with few opportunities to invest in one-off deals.

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AngelList's technology platform is a game-changer for startups and investors alike. It delivers value to all players involved, including founders, backers, and angels.

Founders can use AngelList to find funding, talent, and resources to grow their business. This is a huge advantage, as it can be tough for new companies to get off the ground without support.

Backers, on the other hand, can use AngelList to discover and invest in promising startups. This platform gives them access to a wide range of investment opportunities, making it easier to find the right fit.

AngelList's platform is designed to facilitate connections between founders and backers, making it a valuable resource for everyone involved.

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AngelList is a platform that allows startups to raise funds from accredited investors, but it's not without its limitations. It charges a 5% fee on the total amount raised, which can add up quickly.

One of the biggest drawbacks of AngelList is its limited accessibility to non-accredited investors. This means that the majority of the population is excluded from investing in startups on the platform.

In some cases, AngelList has been criticized for its lack of transparency in the funding process. Startups may not always disclose their financials or other important information to investors.

AngelList Fund Performance can be a bit tricky to understand. The platform's performance data includes unrealized gains, so it's not entirely accurate.

AngelList's own performance data shows a ~15% IRR and 2.1x multiple, but these numbers are based on unrealized gains. You should take them with a grain of salt.

The platform reports that some early-stage startups may take 10-15 years to exit, making it tough to judge real performance until 2025 or 2030.

The Access Fund and Select funds on AngelList have reported the following performance data:

Keep in mind that this is fund-wide data for a huge portfolio, and you're unlikely to see similar numbers if you invest in individual companies.

Investing in individual companies on AngelList is accessible, but it's not a good long-term strategy. You'll have almost no informational advantage in any deals, making it a high-risk, high-reward proposition.

Investing in funds is a much better idea, but the minimum investments have risen greatly. You can now expect to pay $100K or more to invest in most platform funds.

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Dilution is a major issue on AngelList. Expect 20-30% dilution in each subsequent round of funding, and if there's a liquidation preference, you may get nothing at all.

Reporting and updates on AngelList are infrequent. You might only receive quarterly updates on one company in your portfolio, and even then, it's because you invested off-platform.

If you invest in a company worth $10 million with institutional money behind it, don't expect detailed quarterly updates. You're just a small fish in a big pond.

Dilution is always an issue, even for the best investors in the business.

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AngelList Leadership is a key component of the platform's success.

The company was founded by Naval Ravikant and Babak Nivi in 2010.

Naval Ravikant is the co-founder and current CEO of AngelList.

AngelList has grown to become one of the largest startup marketplaces in the world.

Babak Nivi is the co-founder and former CEO of AngelList.

The platform has helped thousands of startups raise millions of dollars in funding.

AngelList has also expanded its services to include talent recruitment and other tools for startups.

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AngelList Syndicates are a powerful tool for startups and investors alike. They allow groups of angels to pool their resources and invest in startups together.

Top angels have formed Syndicates on AngelList, capable of funding startups to the tune of several million dollars. These Syndicates can elevate their investors to the ranks of Super Angels or Micro-VCs.

Strength definitely comes in numbers, and the trends are in favor of platforms like AngelList that leverage technology to deliver value to all players involved. This includes startups, angels, and backers.

Our Seed Syndicate and Our A+ Syndicate are examples of the potential that AngelList Syndicates offer.

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