Launching FG Angels To Make Investments on AngelList

This morning my partners at Foundry Group and I announced that we are going to make 50 seed investments of $50,000 each on AngelList between now and the end of 2014. We’ll be doing this via AngelList’s new Syndicate approach through an entity called FG Angel where we will create a syndicate of up to $500,000, allowing others to invest $450,000 alongside anything we do. For now, we are using my AngelList account (bfeld) which I’ve renamed Brad Feld (FG Angel). We are working with Naval and team at AngelList to get this set up correctly so that a firm (e.g. Foundry Group) can create the syndicate in the future, at which point we’ll move the activity over to there.

For years, we have had people ask if they can invest alongside us at Foundry Group at the seed level. We’ve never had an entrepreneurs fund, or a side fund, so we’ve encouraged people to invest in Techstars and other seed funds that we are investors in. As of today, we have a new way for people to invest alongside of us – via AngelList’s syndicate. The minimum investment is $1,000 per deal, so if you make a $1,000 commitment to our syndicate, you are committing to investing $50,000 alongside of us between now and the end of 2014 in the best seed investments we can find on AngelList. Simply go to Brad Feld (FG Angels) and click the big blue “Back” button. Special bonus hugs to anyone who backs FG Angels today (as I write this, the first backer has come in – from Paul Sethi – thanks Paul – awesome to be investing with you.)

This is an experiment. If you know us, we love to experiment with stuff, rather than theorize about things. We are huge believes in seed and early stage investing and through a variety of vehicles, including Techstars and our personal investments in other early stage VC funds, have well over 1,000 seed investments that are active. This has created an incredible network that adds to our Foundry Group portfolio. With FG Angel, we are taking this to another level as we begin a set of activities to amplify this network dramatically.

So there is no ambiguity, the investments come from our Foundry Group fund. All economics, including the syndicate carry, go to our fund. We are calling this FG Angel because we are approaching this the same way we do with any angel investment. I’ve written extensively about my own angel investing strategy in the past – you’ll see this reflected in what we are doing here. Over the years my angel strategy has been very successful financially and our goal with FG Angel mirrors that.

We expect we’ll learn a lot about this between now and the end of the year. When we learn, we’ll share what we learn. We believe deeply that the best way to learn about new stuff is to participate. So – off we go. We hope you join us – both in the syndicate and the ensuing network.

  • http://John.do/ John Saddington

    Exciting times we are living in! Can’t wait to see what you guys glean from it all in the near (and far) future!

  • TripFlock

    Nice to hear Brad. Looking forward to following the progress.

  • Justin Custer

    Love to see Foundry Group making fast moves!

    • http://www.feld.com bfeld

      Thanks. And I get two new pieces of art today from Amy for my October 1st gift – Disco and Bingo. So – these are Disco moves.

  • http://www.participate.com Alan Warms

    Brad – question – and one you and I have discussed in the past. For these deals, are you going to get full pro-rata rights and will everyone in your syndicate be in the same class as you guys? In other words if I join your syndicate am I guaranteed the right to keep re-investing to maintain my share of ownership? I’ve seen too many angel deals without this right. Sometimes VCs don’t care because they’ll just re-up as a completely new class.

    • http://www.feld.com bfeld

      Unclear at this point – I expect it’ll be deal by deal but I’ll encourage pro-rata rights for the syndicate.

  • http://blog.calbucci.com/ Marcelo Calbucci

    Brad, this is so awesome on so many levels. Clearly you guys are moving fast and it will be heading the pack in learned lessons, and the fact you’ll allow to invest as little as $1K with you will open up a whole new world of investors to participate. Congrats!

    • http://www.feld.com bfeld

      Thx! Hope you are doing well. It’s been a while.

      • http://blog.calbucci.com/ Marcelo Calbucci

        Yes, it has. Last time I saw you, you were lost on the streets of Seattle trying to find Startup Weekend. :) Let me know when you are in Seattle and we can have coffee, lunch, drinks.

        • http://www.feld.com bfeld

          No travel any time soon. I’m staying in Boulder for a while. Come visit me.

  • http://www.EyeOnJewels.com/ Darius Vasefi

    Excellent news Brad, I’m in. It’s an honor to be able to invest alongside you and the FG team and thanks to Naval and Babak for making this possible.

    • http://www.feld.com bfeld

      Awesome @dvasefi:disqus – psyched to have you on board.

  • http://www.startupmanagement.org/ William Mougayar

    Just applied to join yours. This makes a lot of sense.

    Will you also participate in other syndicates from this fund?

    • http://www.feld.com bfeld

      We will invest alongside other syndicates / other angels.

      • http://www.startupmanagement.org/ William Mougayar

        Spaghetti investing.
        So, I could invest in your syndicate, but you could also invest in mine. I realize it’s been the case with VCs also being LPs already, but this probably amplifies and levels the playing field even further with new participants.
        Exciting, but seat belts, helmets and mouthguards will be required.

  • Jeffrey Hartmann

    All kinds of Awesome Brad, I hope this experiment works out well for Foundry Group. Incredibly cool stuff is happening on AngelList, it is great that you and your partners are going to be a part of it.

    • http://www.feld.com bfeld

      Thx. I love doing stuff with Seth, Jason, and Ryan – it’s part of the fun and the magic of working together.

  • Marc Averitt

    Very cool. Possible to do so as a fund or only personally?

    • http://www.feld.com bfeld

      We are doing this as a fund.

      • Marc Averitt

        Interesting. Looking into it. Just traded emails with Jason to schedule a call. Curious as to the legal nuances.

    • http://www.feld.com bfeld

      Oh – you can join as a fund also – although there are some Angellist contortions.

  • http://www.cornfedsystems.com/ Frank W. Miller

    Interesting. I actually just went to join AngelList and I’ve been messing with it now for a bit. The site needs some work. Things don’t seem to work the way I would expect them too. Also, it appears you need to have separate accounts if you want to be both an investor and seek funds. Maybe I just need to spend some more time with it…

    • http://www.feld.com bfeld

      They continue to rapidly iterate on it. We struggled to get a “fund entity” (vs. individual angel) to set up a syndicate (we ended up using my individual account) but we are working with the team to get it right.

      • http://www.cornfedsystems.com/ Frank W. Miller

        I see HUGE potential in this site (and others like it I suppose). And with the recent SEC rules changes, they are definitely in the right place at the right time. I’ve messed with Kickstarter and Indiegogo. KS doesn’t seem to be a good match for traditional HW and SW tech startups unless they like the app that’s being implemented. KS seems to be more artsy focused. Indiegogo has a very low SNR wrt the projects so I think maybe good projects get lost in there (not necessarily implying that my project is “good”). I like the idea of the funding being originated from investors vs. individuals. I think there is too much potential for bad things to happen when people that are not necessarily savvy with startups and investing giving money.

        • http://www.feld.com bfeld

          For hardware, check out Dragon Innovation – http://www.dragoninnovation.com/- we are investors.

          • http://www.cornfedsystems.com/ Frank W. Miller

            Thanks, I’ll look at it. BTW, I think there’s a typo in the link, a “/-” on the end of it?

          • http://www.feld.com bfeld

            Oops. Fixed.

          • http://www.cornfedsystems.com/ Frank W. Miller

            Interesting site. I signed up and am waiting for contact. All these new fangled funding sites (the ones I’ve tried being KS, Indiegogo, AngelList, and now Dragon) have slight variations around how much review the company does before projects are accepted, pro investors vs. individuals, what kinds of services they offer, etc. Seems like the winner(s) in this space will be the one(s) that hit on the right combination of these variations. If I had to make a guess I’d say the most successful will be 1) company reviewed, 2) both investors and individuals providing money (although individuals might need to be aggregated somehow to minimize risk to each individual), and 3) offering additional services (e.g. coding for SW or manuf help for HW). While I’m interested in potential funding, I was also quite interested in the fact that Dragon’s website implies a strong connection to Chinese manufacturing. That’s something I haven’t seen anywhere else. Should be fun!

  • DaveJ

    The AngelList site is unclear on how the carried interest works. In a venture fund, there wouldn’t be any carry withheld until the fund returns capital (or more). Is that the way a syndicate (or if it varies, your syndicate) works also?

    • http://www.feld.com bfeld

      It’s deal by deal. And any member of the syndicate can drop out at any point – basically, it’s not a forever / long-term commitment.

      • DaveJ

        OK, deal-by-deal 15% after capital is returned on that deal? Or 15% from dollar one? Also, if you drop out of the syndicate (though that would be stupid on a 15-month investment timeframe), do you lose your investment in the prior deals?

        • http://www.feld.com bfeld

          1. Only after capital returned. 2. No, you don’t lose your prior investments.

  • http://www.danshapiro.com/blog Dan Shapiro

    I’m even more excited about this than when AngelList first announced the feature. I’m in (if you’ll have me)!

    • http://www.feld.com bfeld

      Love to have you!

    • http://startuplawblog.com/joewallin Joe Wallin

      Dan, that is actually what I was thinking! lol

  • http://petegrif.tumblr.com/ Pete Griffiths

    You guys are great!

    • http://www.feld.com bfeld

      Thx Pete – and fun!

  • http://www.howardlindzon.com howardlindzon

    bubble…or not.

    • http://www.feld.com bfeld

      bath?

  • http://www.howardlindzon.com howardlindzon

    I wonder if you can do IRA money..i would invest this way

    • http://www.feld.com bfeld

      I don’t see why you couldn’t – seems totally logical.

      • DaveJ

        Could it create UBIT because of the pass-through entity? BTW the AngelList site does not say what type of entity a syndicate is – is it a Limited Partnership or something else?

        • http://www.tylerwillis.net Tyler Willis

          I believe it’s an LLC setup to make the investment and own the shares (similar to how SecondMarket has historically done transactions).

  • http://www.startupmanagement.org/ William Mougayar

    What made you decide on the “50” number and ensuing $500K level?

    Was it because you were seeing roughly that many deals that you previously passed on, or another math/returns reasoning?
    What if you don’t find 50 deals in 15 months? Is it “up to 50″, or you definitely want to spend that much for sure?

    Just trying to get under the hood of your reasoning for these key metrics: fund size, deal size, time span and # of deals. This looks like a good case study of a leveraged “micro fund”.
    You’re in essence operating with a span of $25M, but spending it in 15 months instead of a typical 3-4 years, no?

  • http://www.charliecrystle.com/ Charlie Crystle

    I’m still unclear on how some of it works, but I’m in. Would probably rather go the LP route…

    • http://www.feld.com bfeld

      Cool – well – we are going to figure it out as we go!

      • http://www.charliecrystle.com/ Charlie Crystle

        the thing is intoxicating. Way too easy to click and invest…I had to reset everything :)

  • http://www.charliecrystle.com/ Charlie Crystle

    I’m still unclear on how some of it works, but I’m in. Would probably rather go the LP route…

  • Scott Kosch

    Brad, I’m in! I did the signup on AngelList, but clicked the button before realizing it had preselected the $1,000 ($50k) minimum. I wasn’t sure how to change that, but there is something that says “Your Typical Investment per Syndicate Deal,” which I changed from $1,000 to $2,000. Not sure if that sends information to you or not. Anyway, I meant to put $2k in per deal with you. BTW, I’ve been mentoring Atlas in the TS-Austin program, and they were excited to talk with you this past week. Sounds like you confirmed much of the advice I was offering, so Peter is feeling more confident.

  • Felix Dashevsky

    Brad, this is great! Would be very interesting to join. Does the Syndicate have any admin fees, such as escrow, wire, etc.? Curious as those may eat into smallish investments. Thx.

    • http://www.feld.com bfeld

      No admin fees that I’m aware of, but we are still figuring it all out.

  • Randy Shipley

    Who pays for LLC (or LLP) filings for set-up and annual> Are these set up as LLLP, LLP or LLC? Do you know the state they are created in?

    • http://www.feld.com bfeld

      I’ll know the answer to this after we do the first one! Right now AngelList is paying for all of this. They are aggressively iterating on the structure to make it simple.

  • Matt Candler

    Brad, just wanted to say thanks for sharing all you are testing/learning here. Learning much about how we can spur earlier stage investing in education at http://4.0schools.org from you. And I’m going to be following the syndicate personally, too. Thanks again for always sharing what you’re doing.