On Friday I interviewed Naval Ravikant, founder of AngelList, as the guest of our PandoWeekly radio show. We talked about today’s deadline for the proposed general solicitation rules, which the SEC’s advisory committee has since recommended a 45-day extension. (Companies can begin to “generally solicit,” if that’s a verb, and will be grandfathered into whatever rules are officially put in place.)
As a result, companies raising funds on AngelList can publicly show that they are doing so. Here’s the page for that.
In our interview, Ravikant mentioned an interesting development about AngelList’s platform — the launch of syndicates, which allow one angel investor to essentially lead a round entirely on the platform. He did not, however, mention the news that he’d raised $24 million led by Google Ventures and Atlas Ventures at a valuation of around $150 million, a significant piece of information which Dan Primack broke over the weekend.
Actually, the reason I was most interested in talking to Ravikant had no news value whatsoever. I wanted to talk about startups being featured on AngelList. Over the last few months, I’ve encountered an increasing number of seed-stage startups which had their fundraising processes turned upside-down when they were suddenly featured on the platform.
It’s similar to having your app featured in the iOS App Store or Google Play store, I realized. Being featured can make or break a startup’s early momentum on either of the app platforms. If you’re featured in “New and Notable” in the App Store, downloads from that can lead you to break into the top downloaded charts. That kind of early traction doesn’t automatically mean your startup is a success, but it certainly helps.
Companies go to great lengths to be featured in the App Stores. I’m pretty sure Apple keeps the editors who choose which apps are “New and Notable” on full lock-down. I’ve heard stories of startups camping out outside of the Apple headquarters and flying across continents for meetings that never materialized.
AngelList is a bit different. The platform actually works directly with startups to get their profiles ready to be featured. And companies looking to be featured want to attract investors, not downloads.
It works, by the way. Take Dash, the “fitbit for cars” app and hardware startup which recently graduated from TechStars. The company’s profile was featured on AngelList shortly after the TechStars demo day in June. CEO Jamyn Edis says the AngelList feature led to 100 new followers, which pushed Dash’s profile into the “Trending” section of AngelList. That was like being featured twice, he says.
Edis said he got in contact with his new followers and wound up having meetings or calls between 30 and 50 of them. Around 10 to 20 percent expressed serious interest in investing after meeting, and three to five investors will end up in Dash’s seed round. “That’s the kind of conversion rate you would expect on inbound interest,” he says.
“I had low expectations,” Edis says,”not because I don’t think AngelList is a good resource, I think it’s an incredible resource, but because I just didn’t really have a sense that high profile investors are really getting good deal flow on AngelList. But I was very pleasantly surprised.”
So I asked Ravikant to break down the way AngelList chooses companies to feature. He pointed out that about half of the introductions and investments on AngelList come from featured companies, and half come from a company’s own connections.
They way they’re chosen is as follows: AngelList has algorithms that track a company’s momentum and traction. As a company gets followers, views and introductions, it rises to the top of a queue. AngelList’s team is always reviewing the queue, and each week, the company holds a meeting to review the top 20 startups in the queue and choose the ones to feature. AngelList invites angel investors and VCs to the meeting — any investor who is active on AngelList is welcome, Ravikant said.
Once the companies are chosen, AngelList does a Skype meeting or interview with the company to vet it, making sure all the profile information is up-to-date and accurate. Then it’s featured.
Ravikant’s advice to startups on AngelList is to have a complete profile and update it whenever there is meaningful progress. AngelList looks for companies that have something exceptional, he said. It might be traction, a unique product, an incredibly successful Kickstarter campaign that shows credibility, or being the first mover in an interesting space. They may have a top notch angel investor, which AngelList measures (in part) by how many successful introductions the investor has made on the platform. (Other things, such as companies founded and publicly available fund performance are taken into account as well.)
Since introducing the syndicate feature a few weeks ago, Ravikant says the majority of featured companies have come onto AngelList’s radar because their investor lead a syndicate round on AngelList. But it boils down to having that certain intangible something.
“You can’t just throw out a single stat checkbox item,” Ravikant said. “To some extent all you have to do is fill out a very complete profile and put your best foot forward.”
“There’s no magic to emailing us to say, ‘Hey take a look.’ We’re always taking a look,” he added.
Click here for the full PandoWeekly interview with Naval Ravikant.
- AngelListA platform for startups.
AngelList is a platform for startups to meet investors, talent and incubators.
- Meet candidates http://angel.co/jobs
- Apply to incubators http://angel.co/incubators/apply
- We also have an API http://angel.co/api.
Accredited investors can invest in syndicates alongside some of the best angel investors in the world. In 2014, we've invested more than $100m in over 240 startups.
- Meet lead investors: angel.co/syndicates
- Find great startups to back: angel.co/invest