AngelList – Do Or Do Not, There is No Try

by Brad Feld

Yesterday, at our weekly Monday (sushi, sometimes tacos) lunch, we talked about AngelList. Over the weekend we each read blogs about how AngelList was going to transform venture capital, including The Great Venture Capital Rotation, AngelList Syndicates Will Also Pit Angel Against Angel, Leading vs. FollowingIs @AngelList Syndicates Really Such a Big Deal?, and Some Thoughts On The Big AngelList Deal. Notwithstanding the theorizing, prognostications, and brilliant prose, we think that the verdict is still out on the longer term effects of AngelList to the venture capital industry.

After joking that every VC in the US was at this moment discussing AngelList and how it might, or might not, impact them, we decided to do something. Rather than talk, we decided to participate. After discussing a few different ways to engage, we decided to form FG Angels, through which we’ll be an active funder on AngelList.

We are committing $2.5 million to this effort with a goal of making 50 investments between now and the end of 2014 in companies that list on AngelList. We will invest $50,000 of our own money in each company and the balance from our syndicate. Over the years, we’ve had many entrepreneurs ask if they can invest alongside us. We’ve never had a side fund – this is our first experiment with it. For now, we are capping our syndicate at $500,000 although we’ll revisit this from time to time.

These are seed investments from Foundry Group. We don’t have a separate seed program, although we have always been active seed investors through our fund and indirectly through a variety of vehicles. One example is Techstars, where we are investors in the various Techstars city funds as well as Star Power Partners. Another example are the 30+ seed VC funds that, between the four of us, we are personally investors in.

We will make these seed investments using the same strategy that we’ve made in the past as angel investors.  The money will be coming from Foundry Group and all of the economics associated with the investment, including any carry on our FG Angels syndicate, will go to our fund. For these seed investments we will focus on people over ideas (the idea is the price of admission), will decide quickly, and will run in a pack with other angels as we don’t have to be the lead investor. We will be acting like angel investors in these investments – it’ll be unlikely that we’ll follow on in later rounds, unless the company specifically fits in one of our Foundry Group themes, and we won’t be taking board seats in these companies.

Our reach at the seed investing level is now well over 1,000 companies, across Foundry Group, our personal investments, Techstars, Star Power Partners, and the various seed VC funds we invest in personally and as a partnership. We’ve decided to spend the next year working hard at amplifying this network dramatically. Our FG Angels strategy is part of this.  We’ll reveal more as we progress.

We recognize that the landscape for early stage investing is constantly evolving. While we aren’t worried about being negatively impacted by crowd funding, we figure that the best way to really understand it is to participate.