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Angel Funds by AngelList — The easiest way for angels to start a venture fund
Angel Funds are the easiest way to start a venture fund. Raise capital up front so you can make investments quickly and privately. Without the overhead of running a fund.
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#SquadGoals
Definitely a great time to be around startups. I'm just wrapping my head around being a first time entrepreneur, but I know where to look if I ever get to the angel side!
@rrhoover are you thinking of becoming an angel? 😇
~$12,500 for the administrative costs + back office is crazy cheap. For context, I've heard from other VC funds about having their lawyers go over a $100k budget, just to set up a relatively small $10m-$20m fund.
@sarahadowney Syndicates raise capital to invest in a single company. Backers can review the investment opportunity and opt in on a deal-by-deal basis. Angel funds, on the other hand, raise capital in advance to invest in multiple companies. Backers make a single commitment to the angel fund, then the lead angel allocates the fund in whichever companies they choose (usually 5-10 over the course of 6-12 months). Also, syndicates charge "deal carry" (based on the performance of just one deal) whereas angel funds charge "fund carry" (based on the net performance of the entire fund).
@jake_zeller @sarahadowney So, the lead angel has authority to write immediate checks, as I understand it? This is a far cry better than some of the traditional angel groups, which can painfully take months to fund a company.
@johnschenk @sarahadowney That's right! No investment committee needed for approval, etc.
Can this work for India/US startups?
I'm running an accelerator in India for B2B SaaS startups.
Think of SaaS startups with global sales, US entity, India entity, and team in India.
Could I use this platform for funding these startups?
@jake_zeller These startups are incorporated in US (Stripe Atlas for eg) receive payments in US, cloud spend, marketing spend in US.
There is a parallel entity in India, where the dev/mgmt team is paid salaries out of, costs, etc.
Angel Funds are the easiest way for angels to start a venture fund, without the hassle. They raise capital up front so they can make investments quickly and privately. Angel Funds provide infrastructure and capital so the operator-angels that startups love can make larger investments, without the overhead of running a fund.
Angel funds are for notable angels who commit to building a portfolio and investing only through their fund, while it has capital. There are already 35 angels funds, with $15M invested in 220 startups.
You can read more on Quartz or on TechCrunch
This is a super interesting idea that works well with the network of companies, founders, and investors. I really appreciate the progressive nature of Angel's product moving slowly outwards to allow non-traditional investors to be part of the game.
I am, however, trying to fully understand this offering. How do the Makers see these services relative to an outsourced fund administrator?
@lwsnbaker Working with AngelList is 10X easier. We abstract out all the complexity. Operator-angels are busy running their companies, so this is very important for them. Also, outsourced fund admin is much more costly. Angel funds start at $12.5K lifetime fees. With a normal fund admin and counsel that number can be $50K+. So running a $500K fund may not even be practical unless it's with AngelList. Plus, we can bring capital to the table too :-)
@jake_zeller, ok. To confirm, KYC/AML, accredited investor verification, accounting and reporting, and LP + GP legal setup are all handled by Angel?
Restrictions on assets or investment types (i.e. investable asset must be made available through Angel.co)?
aladvisors.co = GP of LP and affiliate/subsidiary of angel.co?
@lwsnbaker Yes, all those handled by angel.co. Only restriction on asset type is that it needs to be investable by normal venture funds with institutional LPs. So you can't invest in pass-through entities (tax consequences), cannabis companies, cryptocoins or strange foreign entities, but mostly everything else is OK.
When syndicates first had "pre-backing" vs "per-deal-backing", it was a bit confusing for new backers. The new distinction of Angel Funds is going to be so much clearer and awesome for first-time backers. A great evolution!
@pseudovirtual Does it mean that pre-backing will go away and will be completely housed under AngelFund ?
@mtrajan @pseudovirtual Angel Funds are a separate product and not meant to impact pre-backing. To be clear, syndicates used to have two different types of backers: (i) "funded backers", who store money with AngelList to fund their next deal and (ii) backers who don't. We got rid of this distinction a few months ago. Now, syndicates just have a single class of backers. However, when deciding which backers to accept, the syndicate lead is able to see which backers have money in the cloud and pledge to "auto-refill" their account.
It's a great move)) it is Better to work in the constellation of angels - www.angel.co . Great people and company))
Hello Angellist team, does Angel Funds open up the possibility of having non-accredited investors become fund managers?
@nipungupta Hi Nipun, not at this time, unfortunately. The angel invests in their own fund, so we require that they're accredited.
@jake_zeller great! What do you guys typically look for in the angels? How about newer angels?
@kumi360 Great question.
To start, we want to work with angels that we'd want on our own cap table. These are folks that are helpful and founder-friendly :-)
For angels that have been investing for a while, we look at their track record and want to see that they have a history of notable investments, markups or exits. For newer angels, we want to see that they have an "unfair advantage" that'll get them into top deals. Also, we assess general early-stage judgement, sector and valuation discipline.
I want to clarify that AngelList provides the infrastructure to power these funds, but it's our institutional partners and individual investors on the platform that provide capital. So my reply above shouldn't be viewed as strict criteria, but rather as a generalization of their preferences.
@sarim_haq What are some of the top qualities you look for in the founders you invest in?
This is amazing. Now I just need to make a few tens of millions and join the party! :P
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