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September 23, 2013 09:18 pm GMT
With the loosening of the SEC’s restrictions around general solicitation or public fundraising by startups, AngelList is launching a whole suite of products that could extend its influence (and its revenue model) in the tech ecosystem today. Much has been made of how AngelList’s new ‘Syndicates’ program could revolutionize early-stage funding for startups. Regular angels can essentially raise a venture fund on the fly, bring in a group of friends who are accredited investors and provide a startup with an early round of reasonable size. Then the lead angel takes carry from the deal. This is competitive to the role that more traditional venture firms might play in first round financing. Since the program was launched last month, more than $1.7 million has been raised through syndicates on AngelList (and the number is now higher with a few more deals in the works.) Today, AngelList is taking that program a step even further with ‘Backers,’ a way that angels can round up financing commitments in their network ahead of investing in companies. It could give angels even more leverage to pledge hundreds of thousands of dollars in seed-stage financing when they take meetings with companies. Here’s a hypothetical example: an angel can step forward and say they typically invest $25,000 (see the slide below). Then the 10 other angels they typically co-invest with can also pledge a similar amount, giving their syndicate more than 10 times the angel’s original financing power. With syndicates, the lead setting up the deal takes a 5 to 15 percent carry of the investment’s returns. Then the group of investors pays a 5 percent carry to AngelList. “This creates a very clean signal,” said AngelList co-founder Naval Ravikant. “You’re putting in money at the same valuation as the lead. They’re only being paid in carry and they have skin in the game.” With syndicates, follow-on investors are basically betting on a lead angel’s judgment in a specific company. But with backers, they’re betting on the lead angel’s overall investment judgment. AngelList will launch a syndicates leaderboard soon, that will show how much angels are able to pool together from their network for a startup and how much carry they typically ask for. This could make the seed and Series A market for financing much more competitive and transparent. Ravikant shied away from pointing out any firms or investors that might lose out in this
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/c74b45vKmSc/
AngelList Beefs Up Syndicates With New Backers Model, Lets Accelerators Raise Funding Too
With the loosening of the SEC’s restrictions around general solicitation or public fundraising by startups, AngelList is launching a whole suite of products that could extend its influence (and its revenue model) in the tech ecosystem today. Much has been made of how AngelList’s new ‘Syndicates’ program could revolutionize early-stage funding for startups. Regular angels can essentially raise a venture fund on the fly, bring in a group of friends who are accredited investors and provide a startup with an early round of reasonable size. Then the lead angel takes carry from the deal. This is competitive to the role that more traditional venture firms might play in first round financing. Since the program was launched last month, more than $1.7 million has been raised through syndicates on AngelList (and the number is now higher with a few more deals in the works.) Today, AngelList is taking that program a step even further with ‘Backers,’ a way that angels can round up financing commitments in their network ahead of investing in companies. It could give angels even more leverage to pledge hundreds of thousands of dollars in seed-stage financing when they take meetings with companies. Here’s a hypothetical example: an angel can step forward and say they typically invest $25,000 (see the slide below). Then the 10 other angels they typically co-invest with can also pledge a similar amount, giving their syndicate more than 10 times the angel’s original financing power. With syndicates, the lead setting up the deal takes a 5 to 15 percent carry of the investment’s returns. Then the group of investors pays a 5 percent carry to AngelList. “This creates a very clean signal,” said AngelList co-founder Naval Ravikant. “You’re putting in money at the same valuation as the lead. They’re only being paid in carry and they have skin in the game.” With syndicates, follow-on investors are basically betting on a lead angel’s judgment in a specific company. But with backers, they’re betting on the lead angel’s overall investment judgment. AngelList will launch a syndicates leaderboard soon, that will show how much angels are able to pool together from their network for a startup and how much carry they typically ask for. This could make the seed and Series A market for financing much more competitive and transparent. Ravikant shied away from pointing out any firms or investors that might lose out in thisOriginal Link: http://feedproxy.google.com/~r/Techcrunch/~3/c74b45vKmSc/
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