A cusp of entrepreneur, angel investor and author, Naval Ravikant is currently the founder of AngelList, a list that compiles almost every start-up and Angel Investor on this planet.
AngelList, as most of the start-ups and investors know is a US-based portal that connects start-ups, angel investors, and start-up job seekers. In its own way, the website brings a sense of democracy to the whole investment process.
Naval is also one of them most accredited Angel Investors in the silicon valley who has advised many companies like – Bix.com, iPivot, XFire, etc and has also invested in companies including DocVerse (sold to Google), FourSquare, Twitter, Heyzap, Jambool (sold to Google), Stack Overflow and Disqus.
A Bachelor in Computer Science and Economics from the Dartmouth College, Naval is known to have redefined and remixtured his way of living in his own unique ways, and he is also very open to sharing his learnings, his experiences and the habits that has made him what he is today.
The Early Life As An Employee Cum Entrepreneur!
Naval was born in India, and had moved to New York along with his family at the age of nine. Growing up in the Big Apple (so it is called), Naval had got the early exposure to the world of technology.
Soon after he completed his Bachelor’s Degree, Naval began his short career as an employee in 1996 and went on to work with Excite @Home – which was a high-speed cable service provider, Intrinsic Graphics which became Google (GOOG) Earth, and lastly, Boston Consulting Group where he taught the staff how to hijack the fax line for dial-up.
After giving a few years of his life to employment, Naval decided to change the course of his life and moved to Silicon Valley to become an entrepreneur and found companies like Epinions.com, which was later bought by Dealtime who changed the name to Shopping.com and went public in 2003.
While at it, Naval also went through a brief yet unsatisfactory phase where he acted as a partner at a venture capital firm called August Capital, after which he raised an Angel Investor fund which helped some of the top notch companies of today’s times like Twitter, FourSquare, SnapLogic, etc.
Now even though he loved investing and spending time with start-ups, he found the process of meeting with potential investments to be inefficient. He often noticed that he had a decision ready of whether he would be or wouldn’t be investing, within the first five minutes of meeting the entrepreneur. However, not to come across as rude, Naval would sit for another hour.
And that is where the inception of AngelList began!
The Story Of AngelList!
Now although the idea of AngelList evolved after Naval’s Angel fund but not many know that the origins of its story dates way back to the days of Epinions, his first find.
Soon after selling the company to Dealtime in 2003, Naval in an apparent move along with his cofounders and employees, had sued the venture capital firms Benchmark Capital and August Capital, and one of his own co-founders as well.
According to the Naval and others who were suing; during the Dealtime merger, with the help of false documentations, representations and material facts related to Epinions’s financial affairs, business operations and how other stake holders would be treated in the merger, they were deceitfully made to give up their ownership interests in Epinions for nothing.
Although this suit eventually settled in 2005 for an undisclosed sum, but this earned him a very bad in the Silicon Valley. As a matter of fact, he was called as “radioactive mud” in Silicon Valley.
But this was also the time when the power was shifting from the hands of Investors to the Entrepreneurs. In addition, TheFunded, had also hit the market by a rejected entrepreneur called Adeo Ressi, which empowered the entrepreneurs to share their grievances about their investors anonymously.
But time passed and Naval also moved on! In 2005, he started a classified advertisement marketplace called Vast.com.
Now this whole legal-battle phase not only gave him deep-rooted knowledge about the mechanics and the rules around fundraising, but also made him realise that there was so much that the entrepreneurs were unaware of, thus making them vulnerable.
Hence, for starters Naval began writing a blog called Venture Hacks in 2007 which in-detail explained how venture capital works, how to negotiate term sheets, which sections mattered, which provisions were bogus, etc. It was a joint initiative of Naval and his cofounder Babak Nivi.
The blog also spoke about many other things like how to choose a cofounder, and explained certain really important points including – the control provisions are completely separate from that of financial provisions; therefore, you may own more than half of the company but that doesn’t mean it’s your company.
In a span of two years, not only did Naval covered most of what had to be put out to the entrepreneurs in the market, but had also started a fund called The Hit Forge, around 2009.
During that same period he ran into an investor friend of his, who had offered him a deal saying that and I quote – “let’s do this deal before anyone else finds out, I don’t think he’s hit the market yet”.
This made him realise that not all investors are aware about all the start-ups out there, and vice-e-versa. There was no connecting point!
Having said that, he again partnered with Babak Nivi, and made a list of about 25 investors, to keep them updated about interesting start-ups. This went on to extend to two lists – AngelList and StartupList.
And finally in 2010, with a list of 50 Angel Investors who were willing to invest $80 million that year in start-ups; Naval launched AngelList!
The Era Of Angellist
To begin with; it was called AngelList because it had started off as an email list.
In the simplest terms, AngelList was a medium that connected the parties that wanted to do business. Naval likes to think AngelList more like as eBay or for that matter even Match.com.
He believed that, this was a problem that initially LinkedIn had aimed at solving and also built the largest database of business people online, but quite frankly never really got around to getting them to do business transactions with each other through LinkedIn.
Additionally, he also brought about the Jumpstart Our Business Start-ups (JOBS) Act, also known as the Crowdfunding act by getting signatures from more than 5,000 entrepreneurs and investors via online petition, and then finally making two trips to Washington and to convince the Senate and Congressional staffers, Steve Case, and influential Congressmen.
The law was finally signed by President Barack Obama himself in 2012, which gained a lot of attention because it gave the ordinary people the power to invest in start-ups as easily as they invest in stock markets.
This stint of his along with the AngelList earned him high praise in the tech world and also helped him restore his lost reputation as well.
Moving on; in the next few months, AngelList introduced an old idea of his called Syndicates, a service that in a way influenced the financial transactions, by leveraging the tech celebrities to collect investor followers and channelize their capital into attractive start-ups. He likes to call them Micro-VCs, but with no fees, no lockup, and the leads having real potential.
Basically, it empowered these techies to fund companies without having to go through the pain of setting up a firm and spending months or longer, to find vast money pools through various mediums that back venture capitalists.
If you look at it, this arrangement had something to offer everyone – the investors would get a piece of a deal which they would have otherwise never heard, Syndicate leads (the tech celebrities) would get a “carry” on the profits from any of these successful deals, and the companies that receive the funding would although get the funding from many investors but would only have to deal with syndicate leads.
What is the benefit of AngelList?
Well, because of Syndicate AngelList gets to add a revenue model in their kitty and takes a 5% carry on all syndicate profits.
In 2013, AngelList had reached 54,000 company profiles, 12,000 examined candidates looking for jobs, 5000 sophisticated investors, and another 10,000 accredited investors who were investing by putting small checks into companies.
By 2014; this figure increased hysterically. The syndicates had invested more than $100 Million, AngelList had raised $104 Million online, the platform had helped 243 start-ups get funded and 2673 investors had participated.
Later in the same year, AngelList also launched a range of new funds, with a potential to support syndicate investments in 100 start-ups. The basic idea behind this move was that, if for example, there is a $200 million foundation, there is no reason they would waste time in going through $20,000 opportunities.
Due to such immense developments; with transacting seed deals worth $87 million in the initial year, and at an annual run rate of $127 million along with rising volumes more than 300%, AngelList in 2014 theoretically ranks amongst the country’s most active venture capital firms.
And in the present year, AngelList also launched its UK syndicate which allows individuals to co-invest with early investors in successful billion dollar European start-ups as well.
Other than AngelList, he personally has also made a total of 83 investments 78 companies as per Crunchbase. Some of the traits that he looks for include Intelligence, Energy, Integrity and Charisma in an entrepreneur. Some of these investments include: – Immediately, HONK,
HoneyBook Inc, Kinnek, Lenda, MakeLeaps, Product Hunt, Cover, Opendoor, Crew, etc Lastly, talking about their Funding Rounds; AngelList personally has raised a total of $24.1 Million from Investors including Bloomberg Beta, Kima Ventures, 500 Start-ups, Atlas Venture, Expansion Venture Capital, Google Ventures, and many more!