AngelList

AngelList: Revolutionizing Startup Investments globally, and now in India

AngelList, founded in USA in 2010 by Naval Ravikant and Babak Nivi, has transformed the way startups connect with investors and raise funding.

The objective of AngelList founders was to democratize the process of startup investing. Before the advent of platforms like AngelList, Angel investors didn’t have access to high quality deals and at the same even or startups it was tedious to do angel funding rounds.

Initially conceived as an online platform to connect startups with angel investors, it has since evolved (at least in North America) into a comprehensive ecosystem that encompasses fundraising, job hunting, and syndicate investing.

Over the years, AngelList has expanded its reach globally from Silicon Valley to Europe and now increasingly, to India.

What are the functionality and features of AngelList?

AngelList, at its core, serves as a platform connecting startups and angel investors.

Therefore, its functionalities include:

  1. Fundraising: Startups can create profiles detailing their business models, traction, and funding requirements. Investors can browse through these profiles and directly invest in promising ventures.
  2. Syndicate Investing: AngelList allows experienced angel investors to create syndicates and acting as lead investors, thereby pooling capital from multiple backers to invest in startups. This model enables emerging angel investors to benefit from the expertise of seasoned professionals while reducing risks.
  3. Talent Acquisition: Startups can leverage AngelList to recruit top-tier talent, ranging from engineers and designers to executives. The platform’s job board facilitates seamless hiring processes, enabling startups to scale their teams efficiently. This functionality is not yet available in India. 

How popular is AngelList?

AngelList has emerged as the go-to platform for startup fundraising, with thousands of companies raising capital through it annually.

In terms of market share, AngelList commands a significant portion of the global startup investment landscape. While precise figures are unavailable, industry estimates suggest that AngelList facilitates billions of dollars in startup investments each year, solidifying its position as a market leader.

In India, more than 500 startups have been funded through AngelList India.  There are thousands of angel investors on board and more than 50 investment specific syndicates have been created. The total funds raised on AngelList in India is more than US$ 200m.

Why Emerging Angel Investors Should Utilize AngelList?

For emerging angel investors, AngelList offers unparalleled opportunities to kick start their investment journey.

Here’s why:

  1. Access to Diverse Deals: AngelList provides access to a wide range of investment opportunities across various industries and stages of growth. Whether you’re interested in early-stage tech startups or direct to consumer brands, AngelList’s expansive marketplace ensures ample choices for investors.
  2. Participation with low capital:  Unlike traditional angel investing, which often requires substantial capital, AngelList enables investors to participate in syndicate deals with small financial commitments. This democratized approach democratizes access to early-stage investments, empowering aspiring investors to diversify their portfolios effectively within their limited capital.
  3. Learning from experienced investors: AngelList serves as an invaluable learning platform for novice investors, offering insights into market trends, due diligence processes, and investment strategies. Additionally, by interacting with experienced investors and entrepreneurs within the AngelList community, emerging angels can gain valuable mentorship and expand their professional networks.
  4. Relatively low risk: Though angel investing is inherently risky, successful investments yield lucrative returns. By leveraging AngelList’s curated deals and leveraging the collective experience of syndicate members, emerging angel investors can identify high-potential opportunities. 

What is AngelList India?

With the launch of AngelList India in 2018, the platform has deepened its commitment to the Indian startup ecosystem, offering tailored solutions and localized support to founders and investors.

The investment entity of AngelList India – AL Trust – is registered as an angel fund (a sub category of venture capital fund) under Category – I AIF with SEBI, in accordance with the SEBI (AIF) Regulations. AngelList India has a dedicated site for India, www.angellistinida.com.

How can angel investors in India access AngelList India?

Individuals can sign up on the website- they can invest individually or become a part of a syndicate. They can then go through the deals available for investing.

A separate scheme/ SPV is created for investment into each startup company. When investing through AngelList India, investors do not receive ‘shares’ but instead get ‘units’ of that particular scheme allotted.

As it’s a SEBI approved angel fund, it’s open only to accredited investors.

Who are accredited investors?

For an individual investor, one needs to have net tangible assets of at least INR 2 crore excluding value of his / her principal residence and who:

  1. Has early stage investment experience, or
  2. Has experience as a serial entrepreneur, or
  3. Is a senior management professional with at least 10 years of experience,

For a body corporate (LLP or Company), a net worth of at least INR 10 crore.

Are there any minimum commitments on investment amounts?

Investors are required to meet the SEBI prescribed minimum threshold of investing INR 25 lakhs over a period of 5 years from the time of making their first investment with AngelList India. This amount can be invested in a single investment or over multiple investments.

Ideally, as has been covered in our course, Navigating Angel Investing (https://courses.vcify.online/courses/Navigating-Angel-Investing–658d6cbee4b05be0e76e02b6) also, it is preferable to have a portfolio of ten investments to reduce the risk and increase the likelihood of getting a “star” investment in the portfolio.

How can founders access AngelList to raise funding?

Create your company’s profile, mission, products/ services, bank account details for receiving funds, the funding ask etc.

AngelList allows you to set up a virtual data room on the platform and give access to investors.

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