Getting our Angel List On

Screen Shot 2013-10-01 at 7.05.31 AMIn the news/hype cycle of venture and start-ups it’s rare when a single news item captures the attention of the entire community, even for a few days, let alone 3 or 4. But AngelList‘s announcement of “Syndicates” has done just that. And it was pretty fun to watch the reactions which ranged from: “this is stupid” to “this will kill venture investing as we know it” to “this will change angel investing forever” to everything in between (see for example, AngelList Syndicates Will Also Pit Angel Against Angel, The Great Venture Capital Rotation, Leading vs. Following, Some Thoughts on the Big AngelList Deal, and Is @AngelList Syndicates Really Such a Big Deal?)

Of course none of these writers know exactly how Syndicates (which in short creates the ability for angels on AngelList to build funding groups around a specific company and take a portion of the upside associated with the success of the company/investment) will really work and neither do I.

But I do know that Syndicates is an interesting idea – and perhaps more importantly, yet another example of how Naval and AngelList continue to innovate around funding models for early stage companies. But I think what everyone is forgetting in this debate is that the radical innovation here isn’t AngelList Syndicates. It’s AngelList itself.  The idea to democratize capital formation is the important idea here and a continuation of a key trend around start-ups and venture capital of the past 20 years. And despite it’s name, AngelList is really about the entrepreneurs who start businesses more than it is about the people who back them (although for those outside of the valley loop, AngelList is also democratizes the funding side of equation – both key parts of the overall Democratization of Entrepreneurship trend that we’re witnessing).

In many ways, Syndicates simply codifies (and specifies a value for) what’s already going on around fundings on AngelList where people get excited about an idea, commit to funding it, and then try to get others to jump in as well. In that sense it’s not really innovative so much as it’s encouraging activity that’s already taking place, making the rules around it more clear, and trying to get as many people as possible to join the effort (which is what Angel List itself is about).

Rather than debate the hypothetical, today Foundry Group decided that it would be more interesting to jump into the middle of the topic we’re all talking about. We’ve been thinking for quite some time about how to better leverage some of the angel activity that’s going on in our community (and through our investment in TechStars and through our own personal investments in companies and venture funds the four of us are already involved with over 1,000 early stage companies).  The creation of Syndicates presents a great way to do this. So today Foundry is announcing the creation of FG Angels, through which we’ll invest in approximately 50 AngelList companies through the FG Angels Syndicate. We’ll put up the first $50k into the syndicate and will cap total participation in each of our syndicate groups at $500k (at least for now). There’s more detail on what we’re up to on our post about it from this morning.

More than anything, Foundry Group believes that we exist to serve entrepreneurs and to make them successful (and that doing so is the best way generate a great return on our investors’ money). AngelList Syndicates supports this idea and the formation of FG Angels is our effort both to be supportive to the AngelList community and to take advantage of a trend that – good or bad for VCs or angel investors – is part of a tidal wave of change sweeping over our industry.

 

  • Holly McIlwain

    Seth, Congrats to you and Foundry Group for jumping into the Angel List agent idea with the creation of FG Angel. Certainly one way to fully understand the benefits and pitfalls of this new investment vehicle is to give it a test drive. I hope your efforts are wildly successful and as a start up entrepreneur myself, I appreciate your participation. Thank you.

    • thanks holly. we felt the best way to fully understand the impact of this was to jump right into it…

  • Charlie Wood

    title wave?

    • uhh… i don’t see what you’re talking about 😉

      • Charlie Wood

        🙂

  • Tom Blue – Lead411

    Seth: A question..

    It says… “how much do you want to invest in each deal?” and $1K is the minimum. So does that mean that $50K is the total minimum because you will be making 50 investments? Or is it possible to throw in like 25K and that would be spread to all 50 deals. I would definitely like to diversify if possible.

    • I believe so, but I also think (but they’re still working out the details) that you can drop out of the syndicate after 25 deals and limit your exposure that way. Along with AngelList, we’re still figuring out the details!

  • Christina Roberts

    Excellent!

  • Saul_Lieberman

    Good point: the radical innovation here isn’t AngelList Syndicates. It’s AngelList itself.

    I could create a platform to facilitate the formation of syndicates but it probably would have little value without the AngelList community.