There are a number of operations in the country that claim to be the founding members of crowdfunding, like Kickstarter, Prosper, Lending Club, Funding Circle, and others. The reason there is so much confusion on who was actually first is because there are different categories of Crowdfunding and P2P. One of them truly was the first one in real estate P2P Lending, another in general crowdfunding, and still others in student loan crowdfunding, small business P2P Lending, and healthcare crowdfunding. For the startup equity crowdfunding marketplace, AngelList is the original crowdfunding trailblazer in the space. They started doing this back before most anyone had even heard of equity crowdfunding or knew what this phrase meant. They launched it initially as a matchmaking platform for startup companies and angel investors, as the name of the company itself cleverly implies.
AngelList Intro & Background
The platform began back in 2010 as a means to provide investors and startup companies with a smarter and easier means of connecting to help each other with opportunities for investments and money with which to fund startup activities and operations. This app does its job well, catering to the two groups in offering them a place to share each other's vital information on who they are, what their ultimate goals actually are, and what they require to get from here to there.
Initially, the idea began as a means to give something back to the startup community that had personally enriched the co-founders Naval Ravikant and Babak Nivi. Since then, we have watched with admiration as it has transformed and grown to take its place as quite possibly the top platform for equity crowdfunding on earth (though British-based Funding Circle might once again argue with such a lofty claim). In the early days, AngelList mostly provided legal documents to help out startups with their complicated filings and paperwork. Today, it has grown dramatically and now includes services such as syndication investing, employment help and resources, and opportunities for financing for small companies and startups. Their statistics can not be argued with, and they really do speak for themselves:
- 2,500 companies have enjoyed successful fund raises on the platform
- $250 million in funds already have been raised on the AngelList platform, a completely verifiable number and not an idle and unprovable boast.
- 30,000 accredited investors call the network and platform a place to hang their hats.
There can be no arguing that AngelList the website has evolved into a massive community of investors, professionals, and startups. We can only stand in awe of their level of unprecedented success and vision for pioneering in this industry.
AngelList Founder and Management Team
Co-Founder and CEO Naval Ravikant co-founded this now-mighty platform back in 2010 as a place for startups to come, grow, and prosper. Before this, he founded Epinions and served as its CEO from 1999 to 2001. Naval is a board member on three different companies at the same time, AngelList, Flipagram, and Heyzap.
Co-Founder and President Babak Nivi Co-founded AngelList along with Naval, actually laying the groundwork in 2009. Before this he worked as Entrepreneur in Residence for Bessemer Venture Partners, focusing on such sectors as retailing, IT, healthcare, and telecoms. He was advisor to Grockit and BackOps, the number one solution for back offices in the world, before his time at Bessemer.
AngelList does not make or facilitate any loans directly or at this time via its investors, but instead facilitates introductions and equity investments in startup businesses.
How AngelList Works
We have to say that AngelList certainly does not appeal to users and investors or startups based on any type of high tech site, platform, or flashy design features. What it does do, and very well at that, is to offer participants a very strong sense of community in this group of investors and startups who come together in many different ways thanks to this outfit. Users are able to follow each other's progress and events, become listed in categories that are specific to them, and obtain more helpful exposure while they are waiting to meet the right investors and find the best possible talent on the site.
The company is shockingly quick to admit that the overwhelming majority of startup companies actually fail. On their professional platform and site, between 33% and 50% of the companies working through the site end in dismal failure. It is a sad commentary on how difficult it remains to come up with a new idea, service, or product and then successfully launch and produce it. Interestingly enough, the founders and management at AngelList observe from their efforts in Europe that the equity sites in Great Britain have a significantly more positive set of equity startup stats than do those in the U.S. The management at AngelList attributes this to the fact that Americans are taking bigger risks and starting up more companies that simply will not succeed as a result of this.
AngelList encourages as much due diligence as possible so that you as an investor will not run afoul of startups that are destined to failure. They say this happens in numerous ways. The lead investor on a startup investment is a big first step. Such an individual is probably pouring in a great amount of money, so he or she will have a vested interest in seeing through good due diligence. The other investors and crowd also consider the company and its lead investors' credentials. When the deal is ready to close, the people at AngelList themselves engage in some due diligence protocols.
New users are able to join the community at AngelList simply and efficiently. This starts by selecting the “Join AngelList” button located at the bottom center of the home page site and colored attractively in gold. There is a basic questionnaire form to fill in with name, email address, and user password. A participant will need to choose the option for which they are joining, to invest in startups or to raise money themselves. Once users submit, they are whisked straight away to their own profile page. After you send investment capital to AngelList, they deposit it into an account at the Silicon Valley Bank. They do not receive interest off of your deposits, nor do they pay any out at all. This money is not considered an investment, but merely a neutral deposit until such a time as you hand it over to a startup company in the form of an equity investment stake in a deal.
- Due Diligence – Just before any deals close, AngelList itself engages in some due diligence procedures on the deal and company in question.
- Facilitate Introductions and Meetings – The purpose of the platform nowadays is first and foremost to assist startups and investors in initially meeting, establishing a relationship, and potentially making things happen. The site is big on members connecting with other members in the community.
- Investor Dashboard – Investors are able to log on and look at their present investments. Startups and investment criteria can be displayed along with the particular markets in which they are interested and also those in which they are not.
- User Posts – You can look at other user posts to determine what they are looking for, if they are an investor how they can help out the startup, and also any investing or syndication networks to which they belong. Besides this, the profiles also contain activity feeds that unveil what the user has been involved with lately.
- Build a profile – Users can choose to become a startup or an investor on this platform.
- View the Recent Activity Feed – On your own homepage or on another user’s profile page, which includes notes about who is following which markets, any recent introductions that have been made, and what investors have financially committed to which of the startups. These user profile pages cover a great deal of helpful information.
- List Your Startup – You can put up your own startup in the specific categories that are most applicable and appropriate to your own venture. More than 2,500 startups have successfully raised funds on AngelList online so far.
- Discover and Learn – What it is that investors are looking for in the startups that they fund.
- Find a Startup Company Job – The platform has now grown into a terrific place for professionals to find jobs at startup companies. This added service has become a major part of the platform's utility these days. High quality talent is here looking for opportunities. This service is completely free to both job seekers and startups hiring talent.
- Fundraise with Syndicates – You are able to join investing syndicates to pool resources for some absolutely massive fundraising efforts on AngelList.
The corporate headquarters is located in San Francisco, where so many of the Crowdfunding and Peer to Peer Lending operations are based and got their start. AngelList's office is found at 16 Maiden Lane, #600, San Francisco, CA 94108.
AngelList Interface Screenshots
Safety is a concern when you are investing in highly risky startup ventures. AngelList is quick to disclose on their site disclosure page that every investor is putting their money into entities which entail a very high degree of risk, either investing via a fund, a syndicate, or alongside a lead investor. In fact they tell you flat out that investors may and frequently do lose all of their initial investments in these fledgeling operations. They go on to state this another way, that the loss of your entire investment is possible and can quite easily transpire. Besides this, any returns paid out are highly uncertain as to when this will happen, as it can be a single year or many years before the company and its equity positions succeed or become liquid enough for you to cash back out.
AngelList Complaints and Ratings
Interestingly enough, there is no Better Business Bureau review or online respected rating on AngelList, which has been around since 2010 and should have one somewhere. There were also no complaints that we found in an online search for the company, which at least is a positive sign. It may be that since the site does not operate as a for profit entity that they are simply not interested in seeking out anyone else's approval or ratings for this idea that began as a give back to the startup community.
AngelList Customer Support
Let's just come out and say it upfront; we figured that AngelList is not big on customer support, and we were all too right. They have a fairly extensive FAQ section, then provide as many as four email addresses depending on the nature of your question. They ask you to use the FAQ section if at all possible, meaning that there really is not a Customer Support team hidden behind the current somewhere sitting around just waiting to field and answer your individual questions.
AngelList Costs & Fees
The thing we find most beautiful and appealing about AngelList is the fact that using the site, and even fundraising on the site, is completely free to both investors and startup fundraisers. If you choose to start up a syndicate, then you will be responsible for the considerable fees that the government requires. Investors have to cover the deal carry to the lead of the syndicate and 5% to AngelList on deal carry as well. This comes to $8,000 that the participating investors can divide up amongst themselves. AngelList is not making any money on this fee, it is a straight pass along of costs. No one has to become involved in syndicates to invest on the site; it is purely optional.
You may wonder how AngelList benefits from this operation without any fees. They grow stronger and more influential with every single deal listed on the site, and with every additional investor who joins and funds these startup deals. They are happy to encourage membership and activity by offering the membership for free. This is an almost unique situation in P2P Lending and Crowdfunding where you are able to be a part of a successful operation like this without having to pay either subscription fees or other charges either to participate as an investor or a startup fundraising company.
Final Words on AngelList
We could not say better than the management at AngelList the items you need to think about in advance of either investing in or raising money for your first (or next) startup company.
- Team – does the team possess sufficient experience in general and also in this particular industry or product specifically?
- Traction – are there enough followers, users, and members for this product or service to not only survive, but to thrive?
- Social proof – are there sufficient numbers of investors and followers for this company or particular management team?
- Technology – what IP or other technological barriers to entry will this particular idea, product, or service encounter along the way and how will they practically overcome them?
If your answers to at least three of the questions are satisfactory and clear, then you may be a solid candidate for AngelList.
Long may AngelList rule the equity crowdfunding universe that it practically created all by itself. A more benevolent leader in the space you will not find.
- This is a strong and useful tool for people investing in and those looking for investment funds for their startup or small business.
- Delivers a number of helpful and practical features that enable its users to either list their venture or to attract the attention of others.
- Even though the design appears to be simplistic, AngelList is able to assist numerous new businesses in obtaining the financial foothold they require to grow and prosper.
- The site actually works very well, even though its design is quite Spartan.
- Investments abound for investors looking for opportunities, as do chances to list a new venture or startup and seek out investment dollars.
- In truth, the application could hardly be a simpler-looking and less appealing-looking interface, though appearances aside, it certainly gets the job done.
It would be hard for an Equity Crowdfunding platform and site to be more perfect than this one. The only weakness we can find with it is the platform's apparently lacking customer service, which does not come as a major surprise when AngelList is being run as a gift to the startup community at no cost or fees whatsoever.