AngelList Review: The world is a constantly evolving place. There are new methods of making money and making worthwhile investments – including angel investments. This form of crowdfunding has gained immense popularity of the past few years. It has spread across a wide range of industries including real estate, microfinance, and even technology.
But what is the hype all about? Is it good to invest an amount of your savings into this newfound class of assets, or should you just stick to typical methods of investment?
Well, we’re here to break it down for you.
What Is Angel Investing, and How Does It Work?
In a nutshell, angel investments through platforms such as AngelList can be extremely beneficial and profitable in certain situations. However, you must have a good portfolio as a prerequisite. With a good crowdfunding platform such as AngelList, the process is simplified a lot further.
Bringing you back to the basics, it is important to understand what angel investors really are. Traditionally, they were known as the upper, rich class who easily invested their money in startups that had a high risk of failure. Since they put their money on the line regardless of the consequence, these angel investors take equity (part ownership of the startup) or a convertible debt as their payment.
As a class of newfound assets, angel investments have begun to show promising results. While it is no lie that a large number of startups will not be successful in the open market, there are many that are now on their way towards success.
As the world evolves and demand patterns change, consumers want new things to look forward to. This gives startups a bigger opportunity to gain profits – and angel investors through AngelList an opportunity to gain extremely high overall returns in terms of equity or convertible debt.
Angels can invest an amount that normally ranges between $5K to $200K, but a normal amount is usually $25K – $30K. When the investments were this huge, only the wealthy were allowed to participate in angel investments. Not because other classes weren’t invited, but simply because other classes were unable to afford it.
The Introduction of AngelList
Launched in 2011, AngelList strived to change the dynamics of angel investing. This new platform allowed any individual to directly invest into startups. The only prerequisite here was that the investors were supposed to be accredited and considerably rich – but not extremely wealthy or elite.
This platform was not only important to angel investors but came as a dream come true for people with startups. AngelList allows startups to utilize a crowdfunding method of gaining investment instead of opting for methods such as corporate loans, personal loans, or investments from single individuals.
Since 2011, the platform has continuously expanding and improved. It has now integrated tools such as job boards, social connectivity, hiring, and even offers a space for marketing your new startup.
AngelList: What Investment Can I Get?
If you are looking to raise capital for your startup, AngelList can be the perfect opportunity. As the dynamics of the world change and people continue to start businesses from the comfort of their homes, it has become increasingly difficult to obtain the funds required to set up your business.
If your plan is unique enough to attract investors, AngelList is the perfect intermediary to opt for. This platform strives to provide investments for startups that are still in their early developmental phases, so as to provide a clear picture of whether or not it will be successful in the long run.
AngelList is also known to provide direct funding to certain startups that the angel investors think will be successful in the future. However, this amount will almost always be above $30K but is able to attract a wider range of startups from various different industries.
Why Use AngelList
For the startup community, AngelList can be a great opportunity. There are thousands of potential investors readily available on the site who are looking for good startups to invest their money in. If they find that your idea is unique enough to bring to the market and that you are asking for a reasonable investment, it is easy to gain the funds that you require to bring your startup idea into existence.
The jobs portal on AngelList is also very impressive. Since working remotely has now become the new norm especially after the COVID-19 pandemic, companies have started using platforms such as AngelList to find their next top hacker, designer, or marketeer. Steering away from typical hiring and networking platforms, AngelList is a place that is much less about what you have achieved on paper and much more about your skills in the real world. This gives people who are less ‘qualified’ a chance to gain a proper job opportunity – especially if they are good at what they do.
AngelList also serves as a great ranking and networking platform. As the world slowly shifts towards remote jobs and work, it is increasingly necessary to establish connections with people who can be beneficial for your startup in the future. Maybe this could be your acquaintance from college who now has a startup that compliments yours, or maybe this could be somebody you knew from your first job and collaborated really well with.
By taking a long look at other startups, you can gain an insight about what to do for your own. Since the marketplace at AngelList is huge, it is easy to find other startups that are similar to yours in nature and then reach out to the investors who have invested in them. It is likely that an investors would be willing to invest in multiple startups that operate in the same industry – especially if the ideas are unique and the two serve as compliments to one another.
AngelList Features at a Glance:
- Thousands of investors
- Easy to use
- Simple user interface
- Many available jobs
- Social networking and opportunity to establish connections
- Find potential competitors
- Analyze the feasibility of your startup early in its development stages
Potential Improvements in AngelList
If we were to claim that AngelList is a perfect angel investment tool with no flaws, we would be nothing more than blatant liars. It is necessary to take every software with a pinch of salt and evaluate what it truly lacks. Through this, you can do a better job at including the elements in the conversation you have with a potential investor if the platform lacks it – allowing you to create a better, more well-informed impression of yourself in the market.
The biggest downside of AngelList is that it fails to differentiate between startups that are looking for online and offline investments. The reason why this differentiation is important and necessary is because there are many startups that are not comfortable with raising funds online themselves and have a third-party representing them on AngelList. As a result, it becomes difficult to get into contact with the owners of the startup themselves and is an increased headache for investors. This creates a bad image of your startup in the eyes of investors.
To prevent this situation altogether, it is important to mention for yourself if you are raising online or offline investments for your startup.
Another downside of AngelList is that it isn’t necessarily doing the best job displaying startups. Although there are speculations, we still cannot say for sure. AngelList has been speculated to display only a certain range of startups to angel investors – such as those industries that are currently popular or those startups that have already gained significant investments. From the viewpoint of AngelList, it can be considered that they follow this algorithm in order to attract more angel investors and motivate them to invest into startups through the AngelList platform.
For startups, however, this serves as a downside. If angel investors cannot find your startup listed on the AngelList site, it becomes difficult or almost impossible to raise any investments for the new firm. As a consequence, many startups fail long before they even had a chance to bring their idea to the market.
In order for AngelList to prove effective for raising capital for your startup, you need to work on your own self-promotion. Connect with people that you know from the past and encourage them to invest in your capital through the AngelList platform. This will allow you to rank higher in their lists of startups, allowing more and more investors to discover your startup and potentially invest in it.
The Final Verdict
We need to accredit AngelList for achieving what had been due for ages – bringing angel investments online and making them simpler. AngelList serves as an effective platform that connects investors with startups, allowing e-commerce opportunities to emerge. As many people start businesses from their homes, a platform such as AngelList is extremely convenient for them to connect with a range of investors who may help them bring their startup idea into the market. By gaining investments for your startup through AngelList, you can easily start to work remotely from anywhere you please.