Venture Capitalists Actually (Slightly) More Active Than Angels on AngelList
While the start-up fundraising process often seems like a clubby game of relationships and calling in favors, a service called AngelList helps relatively unknown entrepreneurs efficiently show their wares to potential investors. But putting “angel” in the name hasn’t thrown traditional venture capitalists off the scent, especially in this frothy funding environment.
AngelList ran the numbers this week and found that venture capitalists are actually more active than angels on its year-old service.
Essentially, AngelList facilitates introductions between people with money and people who want to raise money. Founders Babak Nivi (pictured) and Naval Ravikant screen potential deals and send them to potential investors. Currently, 725 angels and 557 venture capitalists subscribe to their matchmaking service. (Nivi counts 378 of the VCs as multi-stage investors, and 179 as seed-fund investors.)
Interested investors reply to get “intros” with posted companies, and potentially invest in them. AngelList doesn’t formally track the investments that occur due to those intros, but Nivi estimated that the service has helped orchestrate funding for 219 start-ups from 384 investors.
AngelList counts about half of the investors in each category as active participants. Active seed fund investors have taken 5.6 AngelList intros on average, active multi-stage VCs have taken 5.4, and angels have taken 5.
Of the VC firms, General Catalyst Partners has the most intros, at 64 spread among five partners. The rest of the top five are Atlas Venture, Bessemer Venture Partners, First Round Capital and Charles River Ventures.
Some examples of recent AngelList VC deals include Storenvy and Kleiner Perkins, LawPivot and Google Ventures, LearnBoost and Atlas Venture, and MightyMeeting and Charles River Ventures.
Nivi estimated AngelList plays a role in “a good chunk” of seed financings in New York, and a smaller portion–maybe 10 percent–in Silicon Valley.
But it’s hard to say. While AngelList may be a mostly open book, angel investing transactions are usually much less public.
As AngelList has expanded, it now facilitates funding rounds from seed stage to Series B. Nivi said he sees the differences between rounds lessening as fundraising becomes more efficient and fluid.
That’s in part because Web start-ups are breaking from the pack more quickly than ever.
As Nivi put it, “If those companies experience a breakout, they often skip A and go straight to higher-priced rounds, so VCs that were traditionally players at Series A almost have to invest at the seed level.”
In other words, go seed or go home.