Thousands of startups seek investment every year. Many of them get funded by angel investors, who take ownership equity in return. Many business ideas do not get the attention they deserve. They fail due to lack of funding and it causes a huge loss to aspiring entrepreneurs.
It is not just the loss of an entrepreneur if a good startup fails. Investors also regret it when they lose an opportunity to invest in a profitable business idea. A platform was needed to help startup founders find angel investors.
Naval Ravikant and Babak Nivi had created AngelList specifically to help startups raise funds and succeed. Today, this platform serves startups, angel investors, and job seekers across the globe.
Continue reading to learn about the AngelList business model and how it makes money.
What is AngelList?
AngelList brings startups, angel investors, and job seekers on the same platform. It connects all parties to make funding easier. This platform was established in 2010 and it has a limited number of investors at that time. Founders used the Venture Hack blog to find investors.
Co-founders Naval and Babak used to share beneficial investment details with potential investors. The number of investors started growing and many new startups joined this platform to arrange to fund. Today, AngelList is the best website to find jobs, investments, and new startups with innovative business ideas.
Experts consider AngelList the match.com for new startups and investors. This platform is on a mission to help new entrepreneurs raise capital to fund their business idea. It finds accredited investors and offers them an opportunity to invest in promising ideas.
Currently, this platform entertains over five mission registered users. Over 35,000 recruiting firms are offering work opportunities to well-educated individuals. So, if a candidate wants to find a good job with impressive payouts, AngelList is the platform to begin the search.
Naval and Babak had established AngelList in 2010 to provide interesting investment opportunities to Angel Investors. They had only 25 investors in the beginning, but soon they got 25 more subscribed investors. Initial investors were willing to invest $80 million in companies. They found great startups and more investors came forward to fund new business ideas.
AngelList introduced its job portal in 2012. That same year this company added a portal for incubators and accelerators so that startups can apply for their programs. AngelList’s incubators and accelerators had entertained applications of 500 startups in the beginning. The number has grown exponentially since many startups gained funding through this platform.
SEC’s non-action letter allowed AngelList to operate its Syndicate platform in 2013. It emerged as one of the leading innovations in the angel investment and venture capital industries. Many renowned figures from the tech industry came together to create syndicates. Today, this platform has 165 syndicates operated by more than 4,400 investors.
AngelList had introduced Maiden Lane in 2014. It is the leading online venture fund that invests funds in syndicated deals. This platform had several investors investing over $25 million in various programs shortlisted by AngelList.
This company collaborated with Chinese equity firm CSC in 2015 to establish the latest $400 million fund to support startups, which were in the early stages. It became the largest investment made by a Chinese firm to support new startups.
AngelList has introduced various platforms and acquired one-of-a-kind projects to support new businesses. It became a one-stop destination for startups to gain funding and start operating in the target region. AngelList obviously makes a huge profit through the support and services it offers.
Many startups are currently using this platform to raise funds and establish themselves as successful business. Numerous new investors and businesses will rely on this platform to initiate their journey and make a profit.
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AngelList Business Model
AngelList works to provide startups with potential investors so that they can quickly establish and start serving clients. This platform draws investors to beneficial business ideas so that they can fill up the founding rounds.
Suppose an investor likes the company profile, he/she can swipe right on the website to gain more details about the startup. This platform also offers recommendations and comprehensive information on new companies.
Startups with innovative and efficient business plans gain the required capital pretty quickly on this platform. This platform only has accredited investors, who have got at least $1 million to invest. These angel investors make at least $200,000 per year.
New startups can file a private application to communicate with investors and get better investment opportunities. Aspiring entrepreneurs know how difficult it is to find a good investor to share their business ideas. So AngelList eliminates the struggle part and provides some great investment opportunities to establish the business as quickly as possible.
How Does AngelList Make Money?
AngelList has helped startups across the globe secure the financial aid needed to begin their business operations. How does this platform make money? Does it use ads to generate revenue or promote certain companies? No! AngelList’s revenue model is quite different from what many people presume.
No, this platform generates revenue through three major sources. Those sources are:
These syndicates are “pop-up” venture capital funds. This source plays a vital role to generate revenue for this platform.
- The lead investor is the syndicate creator, who finds and invites other investors. They put collaborate to fund a startup.
- AngelList takes 5% “carry” to facilitate the platform and support the process.
- The syndicate lead or the main investor gains 15% from the revenue generated.
Suppose angel investors fund $50,000 and gain $200,000 in returns, their profit will be $150,000. So, AngelList will gain $7,500 as its 5% carry and the lead investor will gain $22,500 as his 15% carry.
AngelList has never deployed any capital, but it emerged as one of the most profitable venture capital funds. It never invests, but always generates profits through AngelList Syndicates.
Startups not only use AngelList to find investors but also to recruit talented individuals. This platform has become a go-to choice to find top-educated job seekers. Over 3.5 million candidates use this platform to hunt new jobs in 2019. That number has grown further since most candidates found great work opportunities.
This platform is emerging as the world’s leading network of startup talent. Candidates use the paid subscription plan to find work opportunities in their desired fields. Users use filters to find out the required job ads and then apply for their favorite positions.
Many business organizations have also subscribed to AngelList to find the best candidates for vacant positions. Well-curated individuals find the right recruiter to start their careers. This platform generates revenue through its subscription service while helping job providers and job seekers.
Product hunt is a one-stop destination for product enthusiasts searching for the latest products. It features newly created websites, applications, tech gadgets, and hardware projects. Many subscribers use this platform to launch new products along with finding recently enlisted products.
AngelList runs paid ads to promote certain products. It also offers the necessary tools to launch new products. Startups and established companies pay commission for running ads on the platform and using these product launch tools. Thus, Product Hunt is another major source of revenue for AngelList.
Praised by investors, business owners, and job seekers across the globe, AngelList has turned out to be the best platform for raising funds and finding jobs. It became the world’s best platform to enlist startups and find investors.
AngelList team shortlists the best business ideas and find investors to fund those projects. It was accepting 500 startup applications in 2012. Today, thousands of entrepreneurs are using this platform to promote their vision. Venture capitalists and investors are using AngelList’s Syndicates to generate revenue by making a profit. It currently has around 50 investors and over 75 investments.
Twitch, Stripe, and more than 100,000 startups use this platform to find talented candidates for vacant positions. It is certainly the best destination to pick well-qualified candidates for different work positions.
AngelList was originally intended to be a platform where investors find good startups. However, it now offers support to launch and promote products, and it’s the best place to jumpstart the career.
AngelList Future Plans
AngelList has democratized the investment process for startups and businesses. It aims to develop a more innovative investment infrastructure to support more businesses for their funding needs. This platform has aimed to be a one-stop solution for all needs of startups. It became what it aimed for and now it is on a mission to serve even better.
Startups are already using this platform for money and talent. Its Product Hunt platform is also active to promote and sell products. The number of Angel Investors is increasing as this platform reaches new destinations.
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AngelList vs. Competitors
AngelList has made investment super easy for angel investors. Anyone can become an investor on this platform with the help of a Syndicate lead working as a gatekeeper. This platform is like Uber or Airbnb, which make accommodation and transportation simpler without owning any asset.
AngelList has not invested in any startup, but it has facilitated investments through many accredited investors. Fund providers are happy because they got an opportunity to be a part of a profit-making company. Startups are happy because they got easy investments. Job-seekers are also happy because they got a chance to jumpstart their career.
AngelList is only a service provider and it has nothing to do with investments, products, or jobs. It is expanding services effectively and offering new kinds of solutions pretty regularly. Experts believe this platform can deliver more innovative methods of making a profit if it continues to serve startups for their needs.
AngelList has its roots in the United States of America. Since its business model is quite effective and it is offering the best services, it is now active across Europe, China, and even India. It has recently expanded to India because new startups emerging with great investment opportunities.
Angel Investors can assess all the startup ideas and pick companies from all across the globe to make an investment. People, who have already invested in companies, have gained impressive returns on their investments. Therefore, the number of investors on the angel list has been doubled in just one decade!
AngelList was established to be a website where investors could find new startups for investments. It served all parties and ensured everyone makes a profit through the investment. It started serving job-seekers who were looking for new companies with great salary offers.
Today, AngelList has two companies, AngelList Venture and the main AngelList. Both firms generate profit and serve thousands of clients every month. This platform can come up with new products for startups and investors, which may add new things to its business model.
It is already generating way more profit than competitors. Other firms may not even come closer since AngelList is now a globally operated business organization.