AngelList has never been one to shy away from experimentation, and today, it unveiled its latest creation: A $25 million fund that invests exclusively in AngelList deals through AngelList’s power investors.
Here’s how it breaks down: The fund, called Maiden Lane, gives $200,000 to each angel investor. That angel then uses the cash to participate in AngelList’s hand-picked syndicated deals.
It’s like sponsoring angel investors so they can make larger investments — except Maiden Lane’s limited partners aren’t giving the money away but rather are becoming investors themselves. It sounds a bit like VC-contortionist trickery, but there is a point to it all.
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The fund will use AngelList’s syndicated deals and charge no management fees and a 30 percent carry (the carry is the profit from the investment). However, only a third of the carry will go to the fund’s managing partners: Dustin Dolginow of Atlas Venture and Kevin Laws, AngelList’s chief operating officer.
This quite different from traditional venture capital fund structures, where there’s usually a 2 percent management fee and a 20 to 30 percent carry.
So in short, it’s a cheaper (see the math above) alternative for limited partners (also bringing them quite close to early stage companies often found on AngelList), and it also gives the anointed power angels extra leverage in getting deals because of the boost in cash they’re getting.
AngelList has long made it clear that it wants to enable new forms of investment deals, and creating the syndicated deals back in September was a first step (beyond the original idea of AngelList itself). Syndicated deals allow “power angels” to invite others to piggyback on a deal and charge them a 15 percent carry for letting them into the deal, and AngelList takes a 5 percent carry fors enabling the deal, as we previously reported.
Chief executive Naval Ravikant told the Wall Street Journal that Maiden Lane is a natural progression for the platform.
Maiden Lane’s limited partners include Cendana Capital, Makena Capital Management, and Venture Investment Associates. It has also already announced several angels it will back, including Delicious co-founder Joshua Schachter, Stripe investor and former Twitter executive Elad Gil, and writer and investor Andrew Chen.
AngelList, the matchmaking site for start-ups and investors, facilitates all sorts of early-stage technology funding deals. But the site is free and mostly open, so it often doesn’t get formal recognition for its role. Today, AngelLi... read more »
Naval Ravikant is the Chairman of Vast. Previously he found Genoa Corporation (acquired by Finisar) and Epinions (which went public as part of Shopping.com). Previously, he was a Venture Partner at August Capital and led investments in... read more »
Kevin Laws is the Founder & Board Member, Vast. Before Vast.com, Kevin served as a Principal at PacRim Venture Partners with responsibility for sourcing and evaluating potential software investments. Prior to PacRim, Kevin Laws was vic... read more »
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