AngelList is known for connecting startups with the funding necessary to get their company off the ground. The platform offers more than just that though. AngelList is an essential tool for investors as well. AngelList clearly helps build connections between startups and investors. It also helps build connections between investors. AngelList allows investors to access new deals and investor expertise. The potential to expand one’s network to include people from all around the globe is also a great asset.
Here at RVC we are beginning to thoroughly investigate AngelList and are working to build our network. As we learn more about it we will post more information.
Looking through Ty Danco’s blog provides a lot of insight in the decision to use the platform. Here, he speaks about what he considers the four main benefits of AL. He also refers to AL as “the matchmaking service between promising startups and early stage investors which has revolutionized angel and maybe even VC investing.”According to Ty the main benefits for the investor from the service are: broadening your network, improving deal flow, “turbocharge”-ing your due diligence and strengthening existing investments. AngelList also provides information into how valuations function. This of course benefits both investors and startups.
Broadening the Network
AngelList simplifies the complicated art of networking. AngelList makes it easier to reach out to an already existing network or syndicate. It connects investors with peers and experts all over the world. These connections provide extra information that may otherwise be inaccessible. AngelList functions similarly to LinkedIn in that you can see what people in your network are currently doing and also see their portfolio. Current deals, open discussions, private messenger, as well as other services, make it easier to stay on top of what deals other investors think have potential. It also shows which deals angels think are better not to touch. Plus, you can compare the immediate community with the world at large, tracking global trends and see where you may want to invest next.
“Turbocharging” Due Diligence
Groups make it easy for investors to communicate and learn. Through AngelList it is possible to reach outside one’s network (as explained above), which is a great way to share findings and discover expert opinions that may otherwise never be accessible. This means less work for each individual angel and more information gathered from a variety of perspectives. Since due diligence is such an important and time consuming part of any VC deal, it deserves dedicated time and attention. By building networks with multiple accredited investors the quality of insight increases and the opinions of a broad range of angels is available.
Improving Deal Flow
Becoming an accredited investor is important to improving deal flow. This can be done immediately by getting 4 members to endorse skills. Following accredited investors and members of a network shows the deals they are currently looking at and considering.
AngelList is more similar to Twitter than it is to Facebook. It allows investors to add or drop people, without the connotation of “un-friending.” Often investors add other investors when they invest an industry of interest, and drop them when it is no longer their main focus. Feelings are not hurt, though it is best to follow co-investors continuously. Networks change as deals in play change. Networks make it easy to update current interests and keep in contact with previous partners. More deals come across each investors “newsfeed,” so everyone sees more deals and can compares options.
Promote Network Deals
AngelList makes it easy to see which companies fellow angels believe in. With Lead Investors clearly marked, as well as followers it is possible to keep up with trusted peers. AngelList investors can connect their peers with numerous resources, expertise, geographical diversity and a large network of their own. Investors can easily promote deals, giving investors the ability to get more angels involved.