
Angels Get Carry for Helping a Startup Raise Money With AngelList Syndicates - gjenkin
http://techcrunch.com/2013/07/27/angellist-syndicates-lets-angels-get-carry-for-helping-a-startup-raise-money/
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princetontiger
This only works for liquidity events.

Think about it.

No management fees are being charged; only performance fees.

I'm not in the VC business, but there are a lot of investors who are going to
be very, very hurt in the next couple years once consumer technology
valuations crash. On the other hand, this move may let the party last a bit
longer.

Too many people are chasing companies believing the investment will lead to a
10x or 100x return. But, investing in unprofitable businesses is quite
different than publicly traded investments and private equity investments.

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arbuge
In that sense, it puts the syndicate organizers in the same boat as the
investors. As you point out, VCs can get quite comfortable off management fees
without making investors a dime.

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princetontiger
Agreed

I am in the hedge fund industry, so I see this first hand.

The media loves the "2&20" phrase, but fund managers now proffer lower and
lower management fees in order to close funds.

Most of the top hedge funds charge 1.50% today, and newer funds bear lower
management fees.

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antr
Agree. I've even seen some top funds with lower management fees, but it is
very very tough to get in as an LP.

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mbesto
The short version-

A lead angel investor gets a commercial bonus for connecting other investors
to an early-stage startup fund.

My reaction-

Not all exchanges of value have a direct commercial value associated to them.
After we've torn all of the middle-men down with technology, we're now slowly
bringing them back into the mix.

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gojomo
This is disruptively (subversively?) awesome, not just for its initial
incarnation but all the ways it could iteratively evolve.

Right now it's like a per-person "0 [fees] and 20 [carry]". Will AngelList try
to enforce a 20% carry standard or let it vary? [UPDATE: I see a tweet by
@naval confirming angel chooses carry rate.] How about the 0%?

Does the answer change if and when syndicates-of-syndicates arrive? Is that
powerful or too much like an MLM-downstream?

Will loose affiliations of syndicate-leads cross-syndicate (simulating a mini-
VC-firm)? What kinds of support services will syndicate-leads need (and
perhaps share)?

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dirtyaura
Although HN reaction to AngelList syndicates has so far varied from negative
to blah, I think this could be big for startups outside of Silicon Valley. For
early stage startups in e.g. Europe, it's quite significant investment of time
and money to raise an international seed round and having an easier way to
organize international syndictate rounds can be a game changer.

