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A couple of years ago, I was chatting with a guy named Naval, who had a site called AngelList. He had a fiery passion for helping founders and an outsider’s chip on his shoulder.
He wasn’t taken very seriously in the industry, and the venture capitalists I spoke to dismissed him as somewhere between a loon and a jerk.
I literally heard a dozen VCs dismiss AngelList and Naval. They hated it. Some hated him.
That’s when I knew he was going to change everything.
One VC you’ve never heard of famously deleted his AngelList account in a huff (http://jc.is/16JrZnC).
[I wonder if that VC – who turns out to be a nice guy – will ever do a follow up post?]
Naval wasn’t a loon or a jerk; he was just three years ahead of everyone in seeing the power of decentralized funding – and it scared the living sh@#$t out of VCs.
So the petty VCs – especially the ones taking 12 weeks vacation while collecting 3% management fees and showing up late for board meetings – did everything they could to deride him.
Last week he opened up a radical new platform called “AngelList Syndicates.”
It’s basically a “pop-up” VC fund.
Here’s how it works:
1. A “power angel” with a solid track record, who provides massive value, invites other angels to piggyback on his or her deals.
2. AngelList manages that process and takes a 5% ‘carry’ for doing so.
3. The “power angel” then gets a 15% carry.
[Note: a carry is a percentage of the upside. So, if you invested $10k as a syndicate and it turned into $100k, there would be a $90k gain. So, 5% of that gain ($4.5k) would go to AngelList and 15% of that gain ($13.5k) to the super angel. This is fairly standard, with the top firms / fund managers getting 30-35% carry after years of proving themselves.]