How does AngelList make money?

Started as a marketplace connecting startups and investors

This is Edition #2 of the newsletter. You can find the previous editions here.

About AngelList

AngelList started as a marketplace connecting startups and angel investors. AngelList was founded in 2010 by serial entrepreneur Naval Ravikant and Babak Nivi. Using the traction from the Venture Hack blog on entrepreneur financing, Naval and Babak started a list of 25 investors with whom they would share interesting companies to invest in. They announced the list as “AngelList” in 2010, with the subscription of 50 angel investors who intended to invest USD $80 million that year.

AngelList has now evolved into a platform connecting startups, angel investors, and job-seekers looking to work at startups.

Stats

🐣2010 Founded

💰1.8B Assets Under Management (2019)

👩‍💻3.6M Jobseekers (2019)

💸$26.2M Raised

How they make money

1. AngelList Syndicates

Jason Calcanis defines AngelList’s business model very well here. Here’s an excerpt:

It’s basically a “pop-up” VC fund.

Here’s how it works:

1. A “power angel” with a solid track record, who provides massive value, invites other angels to piggyback on his or her deals.

2. AngelList manages that process and takes a 5% ‘carry’ for doing so.

3. The “power angel” then gets a 15% carry.

[Note: a carry is a percentage of the upside. So, if you invested $10k as a syndicate and it turned into $100k, there would be a $90k gain. So, 5% of that gain ($4.5k) would go to AngelList and 15% of that gain ($13.5k) to the super angel. This is fairly standard, with the top firms/fund managers getting 30-35% carry after years of proving themselves.]

Another article here does a great job of explaining how the economics of AngelList works.

AirBnB is the biggest hotel without owning a single room, Uber is the biggest transportation system, without owning a single car. Angellist will be the largest and most profitable venture capital fund, without deploying capital.

In other words, A Zero Capital, Infinite Carry Venture Capital Fund.

2. AngelList Jobs

Twitch, Stripe, and over 100,000 startups of all sizes have used AngelList Talent to discover top job-seekers.

With more than 3.5M candidates actively job-hunting in 2019—and millions more researching their next move—AngelList is the world's largest network of startup talent. They provide a subscription service to companies to unlock Filters and boost job-ads.

With in-depth data about startups and job-seekers, AngelList recently a premium service for companies:
A-List - Top 1% candidates, identified by algorithms, curated by humans & ready to interview.

3. Product Hunt

AngelList acquired Product Hunt in 2016. PH is a product launch and discovery platform. PH makes money by running ads for promoted products and tools for startups to launch new products.

Future

In a platform where you know everything about your participants, there is a lot of potential of effectively using data. For the future, this could be further leveraged by giving you pro-actively all information on the best investing options, startups, and talent whenever and wherever you want. Ultimately, the algorithm could invest or hire for you, based on your preferences, before you even know you need it. Robo-investing in startups, anyone? 🤔 If that happens, I said it first..

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