AngelList Raises $24M, Having Raised $200M for Other Startups and Helped 3,000 People Get Jobs
AngelList, the startup matchmaking platform, has helped 1,300 startups raise $200 million and hire 3,000 employees. Now, it has raised money of its own: $24 million. The round was previously reported by Fortune.
AngelList matches startups and investors, helps startups raise money online, helps startups raise money publicly (which is legal, as of today), helps startups apply to accelerator programs, and now arranges syndicates of investors — where people can pledge to put their money behind a particular angel investor.
AngelList had wanted to advertise its own funding openly to the 21,000 accredited investors on its platform, but was advised that might be unseemly, so instead “we sent it to people we knew in the real world,” said AngelList CEO Naval Ravikant.
The company got 116 of them to participate, including the Kauffman Foundation, Atlas Venture, Google Ventures, Yuri Milner, Chad Hurley, David Sacks, Max Levchin, Evan Williams, Matt Mullenweg, Charlie Cheever and Jeremy Stoppelman.
Ravikant had also wanted to leave out traditional venture capitalists from his own round, but let a few in, he said, as long as they agreed they would have no board seats, control, or access to AngelList deal flow or participant data.
So is AngelList out to evict VCs from their traditional place atop the startup funding process? Not really, argued Ravikant. “The broader theme here is there’s a great unbundling going on,” he said in a phone interview last week. That’s happening at the beginning of the market — where AngelList lives — as well as later on, where more established and sought-after startups now take money from larger, international, hands-off partners like Tencent, DST and Rakuten.
In today’s fundraising market, Ravikant said, “Everyone has to differentiate how they’re value-added.”
AngelList, which recently started facilitating investments that happen online, doesn’t charge fees. It does ask for 10 percent of the “carry,” or eventual monetary return from the sale or IPO of the startups — but that payment is likely long in the future, if it ever comes. It will also allow startups to raise funding publicly, now that the “general solicitation” ban has been lifted by the Jobs Act.
So where will AngelList revenue come from? “We’re not charging for recruiting today but that’s a logical place to do it — $10,000 to $30,000 per hire,” said Ravikant. Job postings on AngelList have resulted in 3,000 hirings, he said.
The big new thing for AngelList is a beta program of investor “syndicates.” This allows investors to invest in other investors with a more flexible format than traditional venture capital.
The way it works is this: Say you have some money (as little as $1,000) but are not sure where to put it — but you think an angel investor you know has particularly good taste. If you’re an accredited investor, now you can put your money behind one of AngelList’s angels (if they agree to take your money), so they go out and find deals with more than just their own money. Unlike regular VC funds, there’s no management fee.
One benefit of this arrangement is it should cut down on the number of “party rounds,” said Ravikant. In recent years, many small tech startups have taken a little bit of money from a lot of different investors. The problem is, when the startup runs into trouble, the investors stop picking up the phone because it’s not worth their time. Now, there will be a lead angel investor who has more responsibility to the company, with the silent support of his or her syndicate.
Syndicates will cost 5 percent of carry to AngelList, plus additional carry charged by the lead investor. In beta since August, the syndicate program has helped raise $3 million so far.