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Why the #1 Investor on AngelList Hates Venture Capitalists (capitalandgrowth.org)
78 points by jkuria 11 months ago | hide | past | web | favorite | 10 comments

I appreciate Penchinas thoughts but its getting rampant on AngelList that leads (Penchina included) put in tiny amounts of money in ($1k) and then require their backers to put in 5x more to participate. With the standard carry terms (20%)

Even that's okay but then companies are dressed up hard to attract a quick investment draw. When it's largely a cheap lottery ticket for the lead.

VC is broken and AngelList allows more exposure to startups but this isn't a good thing.

Last time we got this comment, we checked the #'s and leads put in 16% of the investment on average.

Compare that to 1-5% for a typical VC fund. Partners in a VC fund also take out 10-20% of the fund in management fees.

You can learn more here https://angel.co/economics-syndicates

Some leads have low skin in the game. In that case, you can always opt out of their investments. Or invest in our funds and we'll make the decision for you (for no additional cost) http://angel.co/funds

P.S. We don't hate VCs. They are among our users and customers.

Hi Nivi,

I took a look at some data a while ago, and your "16% on average" sounds a bit off.

Is it weighted on the amount of investments, or not?

VC funds typically require that the general partners put in 1% of the value of the fund. This isn't too dissimilar.

leads (Penchina included) put in tiny amounts of money in ($1k) and then require their backers to put in 5x more to participate.

This doesn't make sense, a lead, almost by definition is putting in the largest share. Does that mean that AngelList deals are typically less than 5k?

From what I've read so-far, this guy sounds top-tier legit "smart money" and matter-of-fact. Maybe doesn't invest a lot, but advice and philosophy are spot-on. (Added to my hit-up list in "possible top-tier Angel leads.")

Most importantly, this guy can break the ice for funding rounds, which gets the thermometer bar for cap table round going. VC's especially don't want to be first, so angels can help sort that out.

Also, another thing to consider is that angels, as a macroeconomic whole, have much more capital and data than in years past, so they're financially able (but not necessarily willing) to gobble up more and more of later-stage rounds.

This is a great article. Dude is totally on point. I think it's funny that the same thing, "What are three things that turn you off when an entrepreneur pitches to you?" are apropos turnoffs of founders on investors.

Disappointingly misleading title, unless I somehow missed the bulk of this interview.

Perhaps hate is a strong word but he clearly does not like them! He does talk about how they only care about themselves, boss around founders and then claim credit for the founders' success.

Which is buried in various parts in an interview largely talking about his own work as an Angel investor. Given this is HN, I was expecting something in actual depth about why VCs might warrant so much hate, and this definitely doesn't have it.

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