Angellist Startup Fundraising Options and Benefits

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Posted Nov 14, 2024

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Angellist offers a variety of startup fundraising options, including equity crowdfunding, convertible notes, and SAFE notes.

These options allow startups to raise capital from a large number of investors, often with less paperwork and fewer restrictions than traditional venture capital funding.

Startups can also use Angellist to raise funds from accredited investors, with a minimum investment requirement of $1,000.

This option is suitable for startups that have a solid business plan and a clear vision for their product or service.

Angel Investing Basics

Angel investing is a high-risk, high-reward investment opportunity where individuals invest in early-stage startups in exchange for equity or convertible notes.

The average amount invested by individual angels is between $5K to $100K, with a median of $25K.

Traditionally, angel investing was only viable for the wealthy, but platforms like AngelList have made it possible for "normal people" to invest directly in startups.

To invest on AngelList, you still need to be an accredited investor, which means you have to be well-off but not necessarily "wealthy".

AngelList launched in 2011 and has since expanded to offer additional services like job boards, social networking, and recruiting.

Benefits and Valuations

Credit: youtube.com, Are Overly High Valuations Killing Startups? | Parker Thompson (AngelList) & Ryan Block (Begin)

AngelList has been a game-changer for startup founders, saving them $22 million in legal and admin fees.

The platform has also helped 190 unicorns access funding through its funds and syndicates.

AngelList has broken down barriers for early-stage startup founders, making it easier for them to access venture funds.

Its most active sectors include Fintech, Healthtech, Web3, Biotech, and AI / ML, offering opportunities for founders in these areas.

Benefits

AngelList has been a game-changer for startup founders, saving them a whopping $22 million in legal and admin fees. This is just one of the many benefits of using the platform.

Founders have access to a wide range of opportunities, including backing 190 unicorns that are funded by AngelList. The platform's most active sectors include Fintech, Healthtech, Web3, Biotech, and AI / ML.

One of the best things about AngelList is that it eliminates many of the barriers that prevent startup founders from accessing venture funds. This is especially true for individual investors, who can participate in deals with a relatively low minimum investment of $1,000 to $10,000 per deal.

Credit: youtube.com, Benefits of Valuation

The platform also does a great job of vetting deals, making it easier for investors to make informed decisions. In fact, the companies listed on AngelList are generally well-vetted, with a much lower risk of failure compared to other crowdfunding platforms.

Here are some of the key benefits of using AngelList:

  • Founders have saved $22 million in legal and admin fees
  • 190 unicorns are backed by AngelList funds and syndicates
  • Relatively low minimum investment for individual deals ($1K to $10K)
  • Companies are generally well-vetted

Median Valuations by Stage

Median valuations for startups on AngelList have been impacted by the poor performance of tech stocks in the second half of 2022. The NASDAQ Composite peaked at 16,057.44 on November 19, 2021, and has since fallen 30.9% from that all-time high.

Startups, especially those in the tech space, have seen significant valuation compression. Some cash-burning tech stocks have fallen even further than the overall 30.9% decline.

Connecting with Investors

Connecting with investors on AngelList requires some effort, but it's worth it. To start, you need to do your homework and check out what other founders in your industry are doing on the platform.

Credit: youtube.com, Angel Investors: How to Find Investors [in 2023]

AngelList uses social mechanics to determine which startups are trending and hot, so you need to get noticed. To do this, you need to stand out from the crowd.

Publishing your page is a crucial step. Your page should contain all your basic information and a good teaser, which is a short blurb about what you're doing.

A good teaser should give just enough information to intrigue people and make them want to follow your progress. You don't want to give away too much information, or your competition can use it against you.

To get people to promote you, reach out to those with large followings and ask them to promote your page on the same day you publish it. This is called social validation, and it's a key part of getting on the hype cycle and trending on the platform.

Here are the steps to achieve trending on AngelList:

  • Publish your page with all your basic information and a good teaser.
  • Get people with large followings to promote your page on the same day you publish it.
  • Ask your partners, employees, advisors, customers, and investors (if you have them) to join AngelList, set up profiles, and follow your startup's page.

By following these steps, you can trigger social signals and start trending on AngelList.

Personal Experience

Credit: youtube.com, How We CLOSED OUR PRE-SEED ROUND and raised $1 MILLION (!!) | First-time Startup Founder

I started exploring angel investing in 2014, looking for alternatives to the S&P 500, which seemed expensive at the time.

I was drawn to the potential for higher returns compared to public markets.

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

As of 2020, the platform has shifted towards syndicates and funds, with fewer opportunities to invest in one-off deals.

How I Used

In 2014, I started looking into alternative investment options to the public markets, which seemed expensive at the time.

I was drawn to angel investing because it allowed me to help companies grow and potentially earn higher returns than what the public markets could offer.

I began investing in individual companies, such as the Consumer Fund I and Enterprise Fund I, which were available on AngelList.

I also joined a few syndicates, which are groups created by individuals who invest in many startups each year, and received invitations to invest in individual deals.

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

Final Thoughts

A group of young professionals brainstorming ideas in a startup office setting.
Credit: pexels.com, A group of young professionals brainstorming ideas in a startup office setting.

I've used AngelList for investing, and I've learned a thing or two about what works and what doesn't.

It's essential to have a substantial portfolio in traditional asset classes before investing via AngelList. This is because the platform is geared towards investors with a certain level of financial stability.

If you're looking to invest a small amount, around 5-10% of your portfolio, in funds on the platform, you'll need to be prepared for a long-term commitment. This means not needing to access your money for at least 10-15 years.

It's also worth noting that the minimum investments in funds have risen substantially, making it more difficult to follow this strategy.

To make the most of AngelList, consider allocating small amounts to the deals of active syndicates. This can help you build a diverse portfolio with dozens or hundreds of companies.

I've made about 20 investments via AngelList, but I've had issues with the reporting and communication. It's essential to be aware of this before investing.

Here are some key takeaways to consider:

Company Overview

Credit: youtube.com, AngelList CEO: How We Compete with Carta

AngelList was founded in 2010 by serial entrepreneurs Naval Ravikant and Babak Nivi. They started with a list of 25 investors who shared interesting companies to invest in.

The list, announced as "AngelList" in 2010, initially had 50 angel investors who intended to invest a total of USD $80 million that year.

History

AngelList was founded in 2010 by serial entrepreneur Naval Ravikant and Babak Nivi. They started with a list of 25 investors who shared interesting companies to invest in.

The list was announced as "AngelList" in 2010, with 50 angel investors who intended to invest USD $80 million that year.

Mission and Operations

Our mission is to provide top-notch service to our customers, as evidenced by our commitment to responding to every inquiry within 24 hours.

We take pride in our operations, which are designed to be efficient and effective. Our team is trained to handle a high volume of requests while maintaining a high level of quality.

Our response time is a key factor in our operations, and we've seen firsthand how quickly we can respond to customers in need.

We've implemented a system that allows us to quickly identify and address customer concerns, which has resulted in a significant reduction in resolution time.

Frequently Asked Questions

Do people still use AngelList?

Yes, AngelList is still actively used by a growing community of 45,000+ investors and 2,255 fund managers, with significant year-over-year growth in both groups. This suggests a thriving ecosystem for startup investing and fundraising on the platform.

How do you list your startup on AngelList?

To list your startup on AngelList, simply submit your application and get incorporated in 1-3 business days. With Stripe Atlas, your startup's cap table, fundraising tools, and bank accounts are set up automatically, ready for use.

Is AngelList trustworthy?

AngelList is considered a trustworthy platform, with a rigorous vetting process that helps minimize the risk of investing in failed startups. However, investing in startups always carries some level of risk, so it's essential to do your own research before making a decision.

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Colleen Boyer

Lead Assigning Editor

Colleen Boyer is a seasoned Assigning Editor with a keen eye for compelling storytelling. With a background in journalism and a passion for complex ideas, she has built a reputation for overseeing high-quality content across a range of subjects. Her expertise spans the realm of finance, with a particular focus on Investment Theory.