7 Things I’d Like To Do On AngelList That I Can’t Do Right Now
However, for all of the buzz and the PR and the street cred AngelList has in the community, the transaction side of the platform is tiny.
Of the almost 700,000 companies listed on AngelList only 710 received funding via the platform.
There are a lot of reasons for this and I’ve identified a couple that provide unnecessary friction.
One potentially big caveat: these 7 points hold true for first-money rounds and startups. The platform works much better for companies that have much more robust information sets and more metrics. But then again — so does every other method of funding startups.
- Tell if any of the information on here is real
Because it’s all self-reported I have no idea if the profiles are real or not. If you can make up LinkedIn profiles and dating profiles can you make up an AngelList profile?
Because you can basically make up companies you can test if there’s demand. That’s a good thing. But then people go on your site and get a first impression of the startup. And get social proof. You can use disclaimers until you’re blue in the face and believe transparency works (it doesn’t as LinkedIn has proven over and over again) but the truth is that confirmation biases and other psychological dynamics enter into choosing an investment and by then it’s often too late. Hard-wiring the data into the dashboards would be a start.
- You can add a lawyer who doesn’t work for you. I made a company profile and connected a lawyer who I met with once for 20 minutes and who I didn’t have any working relationship with (so he had no liability). Having done that I could have opened a fundraising round if I’m not mistaken. I’ve heard other founders do this as well. I’ve of course deleted everything after the experiment;
- You can add mentors who are friends and who are not involved in any way, shape or form with your startup;
- You can enter an educational background that’s not in any way linked to any credible sources of information.
2. Figure out if the the startup is alive and kicking
We have no idea how many startups listed on Angel List are live and in business and how many have either have shuttered or never really got off the ground but were just profiles vying for your attention.
Many thanks to Casey Allen for contributing to this answer.
3. Understand deep in my gut if the founding team is really committed to the success of the company
Looking at an AngelList profile I really have no way of knowing if the team’s really working on the startup full-time or part-time? Have they been at it for years or days? Does the CEO have a full-time consulting gig and is that the hedge or is she full in with no plan B (just how investors like it)?
Just a quick note about a situation I came across today:
A client of mine is vetting a startup listed on AngelList that’s applied to YC. They are looking to see if the team is dedicated to the startup or involved in other ventures at this time and simply lacks focus (meaning they’ll only double-down on their own startup when YC gets involved, which is a negative signal for them).
So this is what we found out:
a) according to AngelList there are three members of the founding team with the following titles: CTO Founder, CEO Founder and COO Founder
b) two are registered in the founding documents as such and one is not, meaning that although all three came on board at the same time, one of the team members is probably not as involved in the business as it would seem on AngelList; further investigation has actually confirmed this (although this did not necessarily have to be the case);
c) two are involved in another startup as co-founders and recently went through another accelerator and still seem to be involved in it; one of the two disclosed this on AngelList, the other person did not.
In summary: Looking on AngelList there’s not way to gauge whether or not someone is really in a startup or not (both formally and informally) and we had to take a look at about 7 other sources online to figure out if the team was really serious about what they were doing or if all of this was just put together to get into Y Combinator.
I know that YC doesn’t do its application through AngelList, but I know others do so improving this might be of value.
4. Feel the “User Love”
For a consumer app I’d like to see if users are really crazy about the app and for a business app I’d like to understand how key that app is for users. Right now I have no idea of easily telling if people are really excited about the product.
5. Figure out if the founders were successful in their previous endeavours — be it at a company, an NGO or a previous startup
If I worked with 500 people over the course of a 10 year career and have been the biggest asshole and passive-aggressive loser I can still find 3 or 5 or even 7 people in this big wide world to write me a recommendation on AngelList or LinkedIn. On AngelList there’s no way to see how I’m connected to these people and how deep my relationships are with them off line. There are tons of people that will write recommendations for each other even if they wouldn’t recommend each other in closer conversations (that you’ll never have with them).
6. Understand who REALLY made all of this happen
The “Project” feature solves for this a bit, but it’s way underutilized.
If someone says they worked on a given product we don’t have any way of seeing what they were really involved in and what their personal impact was on that particular feature set or release. If the co-founders of the startup I’m looking at were instrumental in building SOMETHING BIG that’s different then if they were in a support function and I’d love to know that up front.
7. Learn if the team really has domain experience and passion for the problem they are working on
Last Friday I took a 90 minute call to help a startup raise money. The startup launched 5 months ago, but the team of 4 has worked together for 4 years — first at a big box chain on their mobile app projects, then later at a software consultancy they founded and now, 2 years later, at a product startup. The whole team has been in that vertical and in that market working together for years. Wouldn’t you want to work with a team like that? — passionate about the problem they’re solving, experienced and with little chance for founder drama (because they’ve been through it all).
Ten minutes in it was clear these guys have great founder-market fit, but nobody (besides me and a couple of insiders) knew about it. You certainly couldn’t tell that by looking at their AngelList profile.
All of this takes a toll and makes AngelList an inefficient tool. To that end, AngelList has funded less than 0.1% of all of the companies it lists. Of course it has been used by countless others to source opportunities and to look things up and it’s served it’s core audience — the job seekers and the recruiters. But at it’s core there are some things it could do better.
Will AngelList do any of these things? Maybe. Some of the job ads they’ve published in the last couple of weeks indicate that they might be going in this direction.
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Jakub Kostecki currently runs StartupFactCheck, a due diligence service for early-stage investors that allows them to increase portfolio ROIs. StartupFactCheck is building a forward-looking model to predict startup investment success and will be releasing it’s first product — Aicredible-by the end of 2015.