The one thing that many start-ups need more than anything else is funding. The problem is that finding that funding can be a real challenge. The process can also be quite slow, which is frustrating to entrepreneurs that have a great idea that needs to be pursued in a timely manner in order to be competitive.
Angel List is a online platform that helps organisations raise that money, and it has achieved considerable success in doing so. The company reported that in 2013 there were 500 start-ups that raised $125 million through the AngelList website (Brad Stone, 2014, BusinessWeek).
Precisely what AngelList is can be difficult to understand. On this subject, reporting for BusinessWeek, Brad Stone (2014) writes of AngelList:
“It’s a Kickstarter-like online forum where start-up founders post their ideas and meet investors who fund risky, early-stage companies”.
AngelList itself explains that the idea behind the platform is for start-ups to be able to meet investors, candidates and incubators. The company was founded in 2010 by Babak Nivi and Naval Ravikant, famous for Venture Hacks. The idea has worked very well, as proven by the results and it is appealing to all of the different user types. The overall goal is to make the funding process progress as efficiently as possible, and with stories of companies achieving as much as $500,000 in just one day of being on the AngelList website, it certainly seems as if this has been achieved. The company’s founders claim that the website has the largest network of blue chip investors.
The way it works is fairly straightforward. If you have a start-up you want to promote on the website you complete profile information. This will include important data such as the funding you have already managed to secure. Your profile may then get pitched in front of many different investors, so this raises the chances of gaining funding quite considerably. Who your profile will be seen by varies, as there is the AngelList team itself but also analysts that are on rotation from some of the most important and influential venture capitalist firms out there. Getting featured is not an automatic process however. If it’s going to happen it will within 72 hours of posting the profile. However, chances to get featured continue as you update your information on your progress.
Getting featured increases your chances of finding funding, but AngelList is still helpful even if your profile does not achieve that. The website is excellent for networking with investors that may have an interest in working with your organization. By making sure that you have a strong profile with interesting and appealing information you can message investors and they may just take you up on your proposal. AngelList recommends that you review other profiles on the website to get an idea of what makes a great profile, and complete yours similarly.
In this YouTube video, Naval Ravikant speaks passionately about his project explaining some of the reasons of its success:
It’s not all about the start-ups, however. The website is also designed to strongly appeal to investors. One of the most exciting new innovations on the website added recently was a “Syndicates” feature. This has the benefit of allowing an investor to invite other investors to join him or her in investing in a certain company by creating a syndicate. Naval Ravikant describes this as a “co-vesting for start-ups” opportunity. In these situations there will be a “lead angel”. This offers incredible opportunities not just for start-ups to gain funding but also for investors that want to make money. It is possible to invest as little as $1,000 on AngelList with a lead angel and if your approach is thoughtful and measured, the chances of returns could be very high. Of course, investing through a website like AngelList is not without its risks, and taking care is important. Investing in high risk start-up companies such as those featured on the website is obviously a risky undertaking. However, being able to see what other thought leader investors like Tim Ferriss (author of 4-hour work week) are doing may significantly increase your chances of being able to make money, as it is hoped that these individuals have a great eye for an organisation that has a chance of exceeding all expectations.
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.