January 11th, 2011
A Quora user asks: why would a seasoned entrepreneur, who can get his or her own intros, use AngelList? This is the answer I posted on Quora.
We started AngelList to help startups get intros to investors, but we’ve learned that intros are just a feature of AngelList, not the benefit. We consistently hear the same set of benefits from the startups that use AngelList—even the ones that can get intros on their own:
The AngelList community helps you raise money on market terms, from the most value-add investors, fast. In short, AngelList is efficient.
Or, in other words, AngelList gets you answers to three questions:
- How do I know what my shares are worth?
- How do I know the girl/guy I’m marrying is the best one?
- When is the deal closing?
Before I get into how the community answers these questions, let me say that, one, AngelList is free and, two, you can control exactly which investors in the community see your startup.
1. Market terms
How do I know what my shares are worth?
When you sell your car, do you go to Craigslist, or do you go knocking on doors? When you sell your action figures, do you use eBay, or do you throw a garage sale and offer your toys to one person at a time, over a timespan of ‘whenever’?
You can’t clear the market in series, you can only clear it in parallel. And the only way to clear the market is to go to the market. The best companies on AngelList end up raising money on better terms than they expected. It’s impossible to get that outcome if you’re meeting investors one-at-a-time.
“More than doubled the round size and significantly increased the pre-money.” – Bertram Meyer, Taulia
“[AngelList helped] us close the existing deal more quickly and on better terms than we would have without the considerable additional investor interest generated by AngelList.” – Sean Harper, FeeFighters
“We were over-subscribed not once but twice.” – Gagan Biyani, Udemy
All quotes are from http://angel.co/reviews
2. Most value-add investors
How do I know the girl/guy I’m marrying is the best one?
Terms aren’t everything. You also want investors who can add the most value. All the investors you know are probably on AngelList—but there’s also a thousand other investors on AngelList that you don’t know. It’s highly likely that some of them have massive domain expertise in your market and you will want them involved in your company.
“[AngelList] adds people to the mix that would not be part of the offline deal sharing networks that already exist.” – Fred Wilson, Union Square Ventures
“Not only did we receive high quality responses, they were from investors that had significant experience and insight into our specific vertical. These were angels that understood the market and quickly dove into the core strengths and weaknesses of the business and understood what needed to happen to get to the next level. Nowhere else will you be able to get a collective response from industry experts willing to help not only in terms of capital but from an operational and hands-on perspective as well.” – Nikhil Sethi, Adaptly
“Your network only goes so far. As a NYC-based company, our “reach” into SF / SV investors was fairly limited. AngelList changed that. We have had dozens of investors contact us via AngelList.” – Dave Lifson, Postling
“Most startups know about the “famous” investors — those who have great public reputations or are name brands. But there are an amazing number of high quality angels, who fly below the radar, that AngelList gives you exposure to.” – Anonymous
When is the deal closing?
On AngelList, you show your startup to all the investors that you want to meet at the same time. The investors know that, so they move fast. Even the investors you’re already talking to know that, so they move fast. People sitting on the fence know the time for sitting on the fence is over. The best startups on AngelList start closing in days, not weeks.
“Within hours of posting, we had dozens of qualified, top-shelf investors and by the end of the day we were 100% oversubscribed.” – Mark Risher, Impermium
“Investors I’ve been chasing around for months finally emailed me back. We got $50K committed in the first 10 minutes.” – Anonymous
“By the weekend I had multiple term sheets and by Monday we had closed our round with exceptional investors that I could only dream about. There is simply no other way to raise a round so quickly.” – Shafqat Islam, NewsCred
Fundraising advice from the dudes who do Venture Hacks. We didn’t think this was a big deal and we definitely don’t want to toot our own horn too much but this consistently comes up in customer development with gratified users (see http://angel.co/reviews).
“Nivi and Naval were both available to give me advice as we went around raising our “party round”. For example, I remember having an idiosyncratic issue that I couldn’t figure out, and Naval took a 20 minute call with me where he basically solved what two professors couldn’t quite help me with (background: I was finishing up school while raising my round). The non-obvious value that AngelList has is that Nivi and Naval are like sherpas helping you scale the Mt. Everest that is fundraising.” – Rafael Corrales, Learnboost
It’s the difference between going door-to-door to sell vacuum cleaners and placing an ad on Google. One approach is a pain in the ass. The other is fast, easy, efficient.
Or think of it like this: you do everything else online, why wouldn’t you raise your money online? You put your code on GitHub. You put your servers on Amazon. You buy customers on Google. You market on Twitter. And you can raise your money on AngelList.
If you have any questions about AngelList, send us an email at email@example.com.
Frankly, the less you need AngelList, the more the community can do for you. That sounds surprising but it’s not. The stronger you are, the better your terms will be, the better your investors will be, and the faster you’ll close.
“My only regret is that I delayed posting for so long.” – Mark Risher, Impermium