Now AngelList has raised $24 million in venture financing to build out this vision. I previously reported on the funding in June. The $24 million includes a Series B led by Google Ventures, as well as an earlier Series A led by Atlas Venture. Also participating was the Kauffman Foundation, Draper Fisher Jurvetson, Kleiner Perkins Caufield & Byers, SV Angel, Floodgate, Yuri Milner, Mitch Kapor, Chad Hurley and more than 100 other individuals. Fittingly, the company raised 70% of the funding from investors on AngelList using its "Invest Online" tool.
AngelList has set up its funding so that no venture investors get board seats, because it wants to be seen as a neutral platform, says AngelList's Naval Ravikant. The new funding comes as the site has seen strong uptake in its investing and also recruiting tools.
Today, the SEC's new rules on general solicitation under the JOBS ACT go into effect. These new rules make it possible for startups to publicly solicit investors, which was previously illegal. So far more than 1,000 companies have applied to publicly solicit funds. On AngelList, startups that solicit publicly have to meet a higher standard for verification of their accreditation than other investors on AngelList. Startups that will be publicly raising funds include SoundFocus and Shyp.
AngelList is also announcing "Syndicates," a new way for companies to raise funding. It already has "Invest Online" for startups to raise money directly on the site. With Syndicates, however, one angel investor heads the funding and can choose other investors who can follow that investor.
The lead angel essentially is setting up a small venture fund for each company through AngelList. For example, angel Sundeep Ahuja invests $10,000 of a $260,000 seed round into a company he knows. Other angels then invest alongside him. In this one example--the company's name hasn't been released--the company raised $280,000 in commitments from 29 people in just 24 hours.
It's as if Ahuja has raised a micro-VC fund, except he's doing it for one company. Unlike other venture funds, however, there are no management fee paid by the LPs, who in this case are other angels. There is a 15% carried interest that Ahuja gets if the company is acquired or has an exit. AngelList also gets 5%. AngelList has also run this model with one company, Sqwiggle, which AngelList's Naval Ravikant managed and raised $369,000 from 46 investors. And unlike crowdfunding on other sites, the majority of the investors are fairly well known investors, Ravikant says.
In a related move, AngelList is now also letting angels automatically invest alongside angels. In this program, called Backers, an investor can invest in 10 companies at $25,000 each for Ahuja's deals. If Ahuja has $25,000 backers, he will have $275,000 to invest in each company he finds.
AngelList part of a larger trend of "unbundling" of the traditional venture model. Now entrepreneurs can get help from incubators, angels, early stage VCs and later stage venture investors. Now even micro-VC funds can be broken up into much smaller funds led by individuals. With these funds there is no 10-year lockup like there are with traditional funds. Instead of investing in a firm, individuals can invest in one partner who they can drop at any time. And they don't have to pay management fees, which are seen as a disincentive for fund performance. "Fundamentally what we're doing is creating more super angels, which I think is happening anyway," Ravikant says.
AngelList is also announcing a new funding program for accelerators. Investors can invest in a fund that will automatically invest in the entire graduating class of an incubator. So far incubator AngelPad has closed a $1 million fund for 12 companies and another incubator is in the process of raising a fund and has raised $440,000 so far for 10 companies. AngelList already has had a feature for incubators to run their application process on AngelList and 145 accelerators have done this, resulting in 11,600 applications so far.
On its investing platform, more than 1,300 startups have raised funding. Companies that first raised on AngelList and went on to raise substantially more include Wanelo, Uber and Leap Motion.
More than $200 million has been raised in total by companies through AngelList, including $184 million from introductions and funding raised offline, as well as $16 million raised directly on AngelList through its "Invest Online" feature. Companies that have used that feature include Double Robotics, Philz Coffee and Outbox.
Through this Invest Online feature, there have been 70 completed company fundings and 41 are currently active, with a total of 1,380 investors. This is now running at a $42 million annual run rate. Investors pay no fees, they only pay a 10% carry if the companies get sold. Startups pay no fees to raise funding.
While AngelList may be more well-known for its investing platform, it's recruiting platform has become just as significant--and is the company's source of future revenue. The site has 37,000 candidates, including 13,000 developers, 4,000 designers and 6,000 product managers. The platform has made 3,000 hires. More than 800 companies have made hires on the platform, including Chartboost, Obvious and
So far there are 21,000 investors on the AngelList platform, including 13,900 angels, 3,400 seed funds and 3,400 venture capitalists.
