
Why I Deleted My AngelList Account - DanielRibeiro
http://bryce.vc/post/3520840379/why-i-deleted-my-angellist-account
======
krav
I'll share my experience raising money with Angellist. As a data point, I've
been involved with startups since '99. Before, when you had to raise money, it
was a painful slog, you had to set aside months of your life to beg for
introductions, nag every contact you had. Basically, you were chasing the VCs
(Angels were less prominent then).

This time, raising money for my startup, after our pitch went out on
Angellist, it was unlike anything I or most of my friends have ever
experienced. Angels and VCs contact you, I had two to three weeks of non-stop
meetings, selecting who would be best to take money from, and we raised.

What Angellist did for us was (a) significantly decrease the time to raise
money and (b) put us in front of VCs and Angels we never could have met on our
own, not without at least dedicating months to the process.

My take - it empowers the entrepreneurs, which is why certain VCs don't like
it. Classic internet play - disintermediate the middlemen.

It's just my opinion, but boy, it made my life simple and allowed me to get
back to what I love, which is building my company.

~~~
mey
Minor nitpick, it's not removing the middleman, it is removing information
asymmetry.

Thanks for the insight.

------
MediaSquirrel
You can't win if you don't play.

AngelList is a marketplace. Marketplaces win because they attracts the best
sellers (the companies), and so long as there is competition, the buyers (the
investors) will have no choice but to participate.

Investing is a two-sided affair. I'm not really sure where Bryce is going to
get his dealflow from if he sits on the sidelines of AngelList as the service
itself explodes, attracting all the best companies.

The only companies not on AngelList are the ones that don't quite understand
how the service works. As an entrepreneur, the more you understand AL, the
more you like AL.

~~~
wensing
As an entrepreneur, I like it when investors need little to no social proof to
make a decision.

~~~
MediaSquirrel
As do I. But that takes courage, a trait that few have, AngelList or no.

------
wensing
YC's greatest hack is their ability to invest without social proof from other
investors.

~~~
patio11
YC has a number of great hacks:

1). "Proprietary deal flow" is another way to say "A given firms choices are
to take my offer or forgoe investment." YC has scads of it, partially because
it identifies entrepreneurs at a stage in the lifecycle where angels are not
an option or where they might not be recognized as an option (subtle
difference there). This has accelerated with YC's successful track record.

2). Mass production techniques in a market where everyone else thinks it is
still the Italian Renaissance.

3). Super linear returns to just about everything they do, due to being able
to take one firm's gains and reapply them to everyone else with the YC brand.
If they coach a firm to get one piece of PR, for most angel's that is a one-
off Yay, but YC essentially gets to keep a portion of the win. Ditto link
juice, reputation in the hiring pool, discounts, access to nonpublic
offerings, etc etc.

4). "Alma mater" levels of loyalty among startups, which means that for a
fixed time-bounded investment they continue deriving network effects years
down the line. It's comparable to Harvard giving scholarships: you only have
to educate a poor kid once but he's crimson for the rest of his life.

There's an entire ice-cream sundae of win here, and it's hard to say it's the
peanuts or the chocolate that makes it work. Peanuts taste great, chocolate
tastes great, both taste even better together. And if they find a banana? N^2
flavor explosion.

[P.S. They recently found a banana.]

------
jdp23
It's interesting looking at Bryce's comment about how AngelList is becoming a
"bigger fool's list" is paralleled and Jason's remark that "There are now
_hundreds_ of qualified and unqualified angels who are driven by sport and not
return!" About that bubble ...

Jason also suggests that deals off of Naval's Playground (aka Angel List) will
be in companies "run by very stupid entrepreneurs". Really? Based on Jason's
own characterization of the list, smart entrepreneurs who want investors who
do care about returns -- or have a different idea of sport than Naval, Jason,
and their pals -- would be a lot better off spending their energy elsewhere.
It sounds like the AngelList pond is great for some entrepreneurs and some
investors, but there are plenty of other good options.

------
staunch
As @shervin said on Twitter: "Saying you don't like @AngelList is like saying
you don't like Email. It's a communication tool. Not an investment
philosophy."

~~~
jdp23
A different way of looking at it is that AngelList is also the collection of
people who use the communication tool to invest, so I think it's very
reasonable to talk about "AngelList's investment philosophy".

~~~
prostoalex
Some people I know use Google Finance to invest. With ETFs specifically you
can watch daily inflows and outflows to and from specific sectors.

Is there a Google Finance investment philosophy?

~~~
Johngibb
This is a disingenuous comparison. AngelList is a community, while Google
Finance is merely an aggregator of many other communities.

~~~
prostoalex
That's not the impression that I got, but I guess that's just a testament to
how customizable the experience on AL can be.

Perhaps a closer analogy would be something like WealthFront. I can choose to
follow certain money managers and co-invest with some if I feel like it. Some
are heavily into equity, while others are pursuing commodities. But to call it
a community and look for WealthFront investment philosophy would still be a
stretch.

------
rhizome
Leaving aside the efficacy of AngelList as a service, it appears he simply
doesn't want to be an angel, he wants to be a VC. Hands-on, with a large(r)
degree of control and direction.

~~~
jdp23
That's not incompatible with being an angel.

~~~
rhizome
Semantics aside, I think my distinction covers his rationale as far as it
applies to what AngelList offers.

------
vannevar
FTA: _Think Mike Moritz, John Doerr, Jim Breyer, Fred WIlson, Peter Fenton,
Danny Rimer, Reid Hoffman and the like are just exceptionally good at throwing
darts in the dark? I don’t._

I don't doubt your sincerity, but there is no statistically sound
justification for it. Put 1000 people in a room, have them flip for double or
nothing 10 times, and at the end you'll have a handful of geniuses. That's
assuming that they're playing a game where winning once doesn't increase you
chance of winning again, which clearly isn't the case in the VC world where
the first qualification is to have a lot of money. And let's not forget the
element of ruin, which is the likelihood of losing one's bankroll given the
size and frequency of bets placed.

The one expertise VCs can lay claim to is in the ritual and detail that
surrounds the deal-making process: the term sheets, funding rounds, and exit
strategies. They're generally skilled at getting contracts written. Beyond
that, it's not at all clear that they're any better than 'throwing darts in
the dark' in terms of predicting or facilitating business success.

~~~
neworbit
They may be better at influencing running a company or they may not, but their
value is in their network as much as their checkbook. Angellist is at least a
fair bit its own network - and the "social proof" end of it is WHY it works.

------
nhangen
I think he highlighted a key point, which is that funding seems to be less
about product than it is about who's behind you.

It's kind of like credit - you can't get it until you don't need it.

------
noelsequeira
I know this is an aside, but if there were ever a Disqus comment thread that
came close to the conversations on HN for quality, the one at the end of this
article would pretty much be it.

Some heavyweights have weighed in with some insightful thoughts, there's far
more signal than noise, and a variety of opinions on offer. Well worth the
read!

------
wavesplash
For context: in contrast to other early stage investment groups and many
superangels, his firm (<http://www.oatv.com>) invests in a very
small/selective handful of deals per year.

------
spydertennis
I think AngelList is making the market too efficient and some investors don't
like that.

~~~
gyardley
Hmmm. I remember, three years ago, being advised not to present to multiple
angels at once (then typically done to organized 'angel groups') because the
premoney valuations they offered were typically much _lower_ than what you'd
get from individual angels, one angel at a time.

Presenting to multiple angels at once doesn't necessarily produce a better
valuation for entrepreneurs - it just produces valuations that more closely
reflect the consensus of the times. The true value of the startup's equity has
little to do with it.

If you have to raise right now, you should absolutely use AngelList -- just
don't assume things are always going to be so easy. When the investment
climate for startups goes south again, and it eventually will, AngelList will
go from being the best place to pitch to the worst place to pitch.

~~~
spydertennis
I disagree. The reason you get a lower valuation from Angel Groups is because
they act as a group so they have more power to put in more cash and to
determine your valuation. Angel List is _not_ an angel group by any means.
They do not act as a group and using them is like talking to many individuals.
It's just a more efficient way of doing so.

[In the past I have presented and received offers from Angel Groups and from
Angel List.]

"it just produces valuations that more closely reflect the consensus of the
times. The true value of the startup's equity has little to do with it."

This is a strange statement. How do you determine the "true value" of a
startup's equity without the consensus of the times ie. the market? :-)

------
chrisaycock
Can anyone explain what info comes in an inquiry letter other than the social
proof? I've always though that YC's app did a pretty good job of distilling
who the people are behind a start-up; that's more of what I'd be interested
in.

------
marcamillion
Am I the only one that read the first two or three lines of Jason's comment
and got a headache? [http://bryce.vc/post/3520840379/why-i-deleted-my-
angellist-a...](http://bryce.vc/post/3520840379/why-i-deleted-my-angellist-
account#comment-156695915)

He made a good point, but why does he have to express himself like that ?
Srsly!

Oh, and don't tell me it's passion. Gimme a break.

Kthnx :)

------
adrianwaj
The next evolutionary step after:

"Nearly every email they send includes names of people or firms who’ve
committed to invest."

would be:

"Nearly every email they send includes the number of people or firms who’ve
committed to use."

------
jeffiel
I think Bryce's point is that he doesn't like the way AngelList makes him feel
about his investing.

~~~
ZoFreX
Agreed. I think your view of investing hignes on interpreting this quote:

> Think Mike Moritz, John Doerr, Jim Breyer, Fred WIlson, Peter Fenton, Danny
> Rimer, Reid Hoffman and the like are just exceptionally good at throwing
> darts in the dark? I don’t.

He says this meaning investing is a skill. I see no proof that it is. If
enough people are investing, and success is random, there will be SOME people
that, by chance, have long successful streaks. Past performance is not
indicative of future performance, and all that!

~~~
neworbit
Those guys ARE social proof! How can he disclaim the value of social proof and
cite those guys in the same breath?

------
bricestacey
Doesn't show number of lives...

------
bretthellman
Where does this leave you?

------
namityadav
Not another blog with text-shadow. :-( I had to highlight all the text to be
able to read it.

