AngelList

How Naval turned getting screwed by VCs into AngelList

Shaan tells Naval Ravikant's arc: after Epinions, he felt screwed out of what he was owed by his VCs, took accountability for signing terms he didn't understand, and channeled it into Venture Hacks (demystifying term sheets) and then AngelList, now a multi-billion-dollar startup platform.

“And so he creates Venture Hacks. Venture Hacks is basically a, you know, sort of like demystified version of term sheets. So he basically starts writing down, hey, founders, here's what you need to know about raising money.”

AngelList and Carta turned anyone into a fund manager

Brianne argues the forcing function behind the solo-capitalist boom is platforms like AngelList and Carta that handle back-office, legal and LP connections — but she also spent two years blogging and tweeting to build the track record needed to raise outside money.

“AngelList and Carta have made this incredibly easy. I think the forcing function in venture, which has caused, you know, the ability for anyone to become a VC or to raise their own fund, is these platforms, which basically connect you with investors. They make it really easy to manage like your back office and, you know, you don't have to deal with lawyers and all that stuff.”

Steal thisSpend 1-2 years publicly building a track record (blog/tweet your investing thesis) before you try to raise a fund.

Rule change equals opportunity

Shaan's recurring lens: regulatory or platform rule changes (online lottery legality, NCAA name-image-likeness, AngelList scout programs) open windows for new businesses. He actively monitors for rule changes as a sourcing strategy.

“Rule change equals opportunity. I have another rule change I'm going to do today. That's another opportunity. But this is, this is an example of one of those types of businesses.”

Steal thisKeep a running watchlist of pending regulatory and platform rule changes; each one is a starting gun for a new business.

Break into startup investing as a free-rolling scout

AngelList made deal-by-deal carry splits trivial, so anyone can become a scout. Shaan's playbook: email your 4 favorite investors offering 3 interesting startups a week with no obligation to reply. Within a year you'll have a portfolio of startups you sourced, diligenced, and pitched.

“you'll do 2 things. It'll be fun because it's fun to just check out startups and play that game of fantasy investor. But B, you'll actually walk away within a year. You'll have a portfolio of startups that you have equity in, that you sourced, that you diligence, and that you pitched. And that's like a great way to break into this industry.”

Steal thisEmail 4 investors offering 3 vetted startups a week for free; become a scout and build an equity portfolio with no capital.

Market networks: a network where money flows on every edge

Shaan explains the 'market network' concept (per NFX / James Currier): a regular network passes likes and messages between nodes, but a market network has money flowing across every connection, like AngelList's jobs, investing, and rolling funds. He invested in MicroAcquire because it's structured as one.

“a market network is where it's 10 dots on a screen and there's lines connecting all of them, but there's money signs going in between each, right? So, like, on Facebook, you transfer likes to each other, you transfer comments to each other, messages.. But on AngelList, when you hire someone for a job, you give them money. When you invest in somebody, you give them money.”

Steal thisLook for or build platforms where money flows across every connection, not just content.

Build the Carta for NCAA name-and-likeness deals

Shaan's standout idea: athletes must report every endorsement deal to their school, who report to the NCAA. Build the back-office system of record — like Carta or AngelList — that tracks deals, terms, and payouts and becomes the entrenched infrastructure layer.

“So somebody who builds that back office sort of reporting tool, that underlying infrastructure layer, that's going to become incredibly valuable. A way to think about that is like Carta or AngelList, like these underlying platforms that sit underneath, the, the, the entrepreneur. And so that's one, that's one opportunity that I could see taking off.”

Steal thisBuild the system-of-record reporting tool for NCAA athlete deals; own the data, become sticky to universities, then layer on banking, contracts, and a deal marketplace.

The orthogonal attack: beat an incumbent from a different angle

Shaan introduces 'orthogonal' as the way to beat LinkedIn — not by building a better LinkedIn, but by attacking from a different angle, like AngelList pulling startup jobs off LinkedIn or Dribbble/Behance/GitHub owning designers and developers.

“here's a company I invested in that I think has a cool chance of beating LinkedIn. I want to describe their strategy, but I don't want to use the Silicon Valley jargon. You know this word orthogonal? No. Have you heard people say this? It's like, yeah, you have to take an orthogonal angle, or it's an orthogonal—”

Steal thisDon't out-feature an incumbent; attack the job-to-be-done from an orthogonal angle they can't copy.

Tweeted an $11M rolling fund as an afterthought, filled in 4 hours

Andrew Wilkinson raised one of the largest AngelList rolling funds, around $11M, almost by accident. He tweeted it out as an afterthought and filled the commitments within roughly four hours.

“Yeah, it was insane. We literally were like, we tweeted it out as like an afterthought and we raised it in like 4 hours. It was totally insane.”

Shaan raised a $4M/yr rolling fund from strangers who follow him

Shaan deliberately raised his AngelList rolling fund only from people he'd never met — Twitter followers and podcast listeners — instead of his Silicon Valley network. He hit his $1M target in roughly 3 days and grew it to $4M/year without a single pitch call.

“I'm going to only raise this from people I've never met who just follow me on either Twitter or from the podcast. And I tweeted out, I said, I'm going to try to raise $1 million in 21 days. And we're like, I think we crushed it in like 3 days. And we are now at $4 million a year on the rolling fund from people I never met. And I never did a phone call.”

Steal thisRaise from your trusted audience, not your network — a niche following converts to capital with zero pitch meetings.

How a rolling fund works: a fresh quarterly fund, automated by AngelList

Shaan explains the rolling fund mechanic: instead of raising one closed fund over 6-12 months, AngelList software spins up a new 10-year fund entity each quarter with that quarter's investors, who pay quarterly (e.g. $6K/quarter) and can scale up or stop anytime.

“A rolling fund is different. A rolling fund I could start today. Every quarter is basically like a new little fund. Every quarter I can take on new investors. Investors who are in my current fund can go up if they want and they could double down. They could invest more or they could stop”

Steal thisIf raising capital, use a rolling fund so you can deploy immediately and let investors subscribe quarterly instead of closing one big round.

Join syndicates to read deal memos without putting up money

Shaan's cheapest way to learn investing: join every smart-person syndicate on AngelList. A syndicate commits no money upfront yet sends you every deal memo, so for years he read how top investors think, how much traction companies have, and the quality of deals.

“So the first way I did that was I went on AngelList, and I joined every smart person syndicate I could find. Because I realized with a syndicate, you don't commit any money. You say, I'm— I could invest, 50K, but I might not. And you got every single deal memo. So for years, you know, like 5 years, I've just been reading all the deal memos of these guys.”

Steal thisJoin smart-person syndicates on AngelList purely to receive the deal memos and learn how top investors evaluate startups, without committing capital.

AngelList's rolling fund: raise capital quarterly instead of all upfront

Shaan explains the rolling fund mechanic that finally let him launch: instead of going dark for 3-6 months to raise $5-10M upfront, you collect commitments over time as small as $5K per quarter and start investing immediately. Lighter lift for both the fund manager and the LPs.

“And the key with the rolling fund is you don't have to raise all the money up front. So I can open up so that my idea is next week, I'm talking to AngelList guys who run this because it's kind of like invite only at the moment.”

Don't wait until you're rich — think of yourself as an investor on day one

Shaan's biggest angel-investing lesson: the excuse 'I don't have capital' is false. If you're resourceful and persuasive enough, you can access other people's capital, so start treating yourself as an investor immediately rather than waiting to be wealthy.

“the number one advice I would give to you is don't wait until you're rich to do it. Because at that point, you know, the financial returns, it will just be a part of a broader portfolio. It's not going to be that exciting. But if you really want to do this, start thinking of yourself as an investor from day one and find ways to access the capital.”

Steal thisDecide you're an investor before you have money, then go source capital from people who want deal flow.

Product Hunt sold to AngelList for $20M

After going through YC and raising from Andreessen Horowitz, Hoover sold Product Hunt to AngelList. The publicly reported price was $20 million.

“you eventually sell the company. I think publicly it's come out that you sold the company $20 million to AngelList.”

Solve the hard side of the marketplace first

Ryan Hoover's marketplace rule: figure out which side is harder to acquire and solve that first. Focusing only on the easy side just delays failure. For freelance talent platforms, talent is usually the hard side, because once you have high-quality talent, the hiring demand follows.

“I tend to try to think about which is the harder side of the market and try to solve for that first. And so without giving information about like how Pattern accomplished it, they were able to find that balance and get both talent that seemed to be high enough quality and also demand at the same time. And then like balance that and scale that as they grew. But that's how we tend to think about it. 'Cause marketplace models, the risk of these is when people focus on the easy side of the market and ultimately you need both to work. But if you focus only on the easy side, you never get the hard side and you like delay the hard side in a sense, then you're almost like delaying failure is kind of how I see it.”

Steal thisIdentify the harder side of your marketplace and solve it first; chasing only the easy side just delays failure.