AngelList Review: Connecting Investors and Job-Seekers With Startups
Published Mar 10, 2022•Updated Jun 21, 2022
AngelList is a site founded with one simple mission: "to increase the number of successful startups in the world." It accomplishes this aim by making it easy for accredited investors to invest in startup companies—either by selecting deals to invest in directly or by buying into a fund that provides exposure to startups.
In addition to offering an unprecedented chance to invest in businesses as they get off the ground, AngelList also offers a Talent website where startups can offer jobs, and would-be employees can find a company to work for either in person or remotely.
Borrow our cheat sheet
2% on average
Minimum to invest
Pros and cons
Wide variety of different investments are available
Rolling and managed funds make investing easy
Solid proven track record of performance
Only accredited investors are eligible
High minimum investment requirements
Fee structure can be complicated
What is AngelList?
AngelList has two missions: Providing more investors the chance to "participate in the venture economy," while also giving startup organizations "the resources they need to change the world."
The site provides the chance for accredited investors to gain exposure to burgeoning new companies and potentially make a substantial profit, while also making it easier for promising startups to find the capital they need to grow and thrive.
How does AngelList work?
AngelList offers accredited investors a choice of several different options to add startup companies to their portfolios. Options include:
- Rolling Funds: Investors can choose from a wide variety of different funds that invest in specific types of startups. For example, an investor could put money into the Footprint Coalition if they want exposure to startups that address environmental challenges or in the Forefront Venture Fund if they want to put their money into early-stage companies with amazing founders that are already generating revenue and that have the potential for substantial growth.
- Managed Funds: These funds, including AngelList Select and AngelList access funds, are actively managed by industry operators who specifically select startup deals to put pooled investor money into. All deals are chosen by early-stage investors with a successful track record of performance.
- Syndicates: Buying directly into syndicates means selecting individual startups to put money into. You can build your portfolio on a deal-by-deal basis.
Who can invest with AngelList?
In order to invest with AngelList, you must be an accredited investor and you must have prior experience working for, investing in, or advising a startup company. Many investments require an ongoing commitment and/or a substantial minimum initial investment.
Where AngelList gets it right
Wide variety of different investments are available
AngelList offers multiple different ways to invest in startups. Accredited investors can choose between selecting deals individually or buying into a fund that gives them exposure to startups in different industries or with different goals.
Rolling and managed funds make investing easy
For investors who want exposure to startups but who don't want to select individual companies to invest in directly, rolling and managed funds provide an ideal solution. With hundreds of different funds to choose from, almost any investor can find one that aligns with their goals.
Proven performance track record
AngelList indicates that 57% of top-tier U.S. venture capital deals involve venture capitals that are on AngelList. Further, 190 Unicorns have been backed by AngelList funds and syndicates. A Unicorn is a privately held startup company that has a valuation in excess of $1 billion.
Where AngelList could do better
Only accredited investors can participate
AngelList's requirement that investors be accredited means that many people are ineligible to invest. To be classified as an accredited investor, you must meet certain criteria such as earning an individual income of more than $200,000 over the past two years or a joint income of $300,000 with your spouse. Or you must have assets in excess of $1 million excluding your primary residence. Many people are unable to fulfill these requirements.
Investors need a lot of money to get started and may be required to make an ongoing financial commitment
It can be expensive to invest in AngelList funds or to fund specific syndicates. You may also need to make a relatively long-term commitment. For example, many rolling funds require you to invest a minimum of $5,000 or $10,000 per quarter and to make a commitment for at least four quarters. Managed funds require either a $50,000 per quarter investment for at least four quarters or a $75,000 investment if you would prefer to be able to cancel your subscription at any time.
It can be difficult to determine the total fees you'll pay
The fee structure is complicated when investing on AngelList. For example, each fund or syndicate sets its own individual fees and you may pay a wide variety of different costs including setup fees, carrying costs, administrative fees, and ongoing management fees.
Can you really make money on AngelList?
It is definitely possible to make money with AngelList, although the performance of your investments will depend on the specific deals you invest in or the specific rolling or managed funds you put your money into. AngelList Select Fund I, for example, provided a 23% internal rate of return (IRR) while AngelList Access Fund III provided a 20% IRR.
How do I make money with AngelList?
You can make money with AngelList if the startups you invest in—either directly or through your purchase of a rolling or managed fund—are successful. For example, if you invested in a syndicate and the company is acquired, the syndicate will receive a payout. Each investor will get their initial investment returned, plus a portion of profits.
How do I cash out with AngelList?
You are required to make a long-term commitment when investing with AngelList. You cannot liquidate your position unless there is a portfolio company exit or unless a fund ends its lifecycle and is liquidated. Typically, venture investments are made over seven to 10 years, so you should not expect to be able to cash out quickly.
AngelList vs traditional investing
Investing with AngelList is very different from investing in stocks in individual companies. You can generally buy stock only in publicly-traded companies with most brokerage firms. But AngelList allows you to invest in privately-held startups. Your investment is far less liquid with AngelList, as you may not be able to cash out for a decade or longer. However, you have the potential to earn higher returns if the startups you're invested in are acquired or go public.
What other people are saying about AngelList
Reviews of AngelList are mixed. One Reddit user described the "aggregate quality and hit rate" of the 800 to 1000 deals he evaluated as being "very, very low." However, another said they had "invested in various funds and syndicates (single-company deals) on AngelList over the past 5 years and been happy with the returns."
Are there other apps like AngelList?
AngelList is just one of many different platforms that allow you to invest in startups. Fundify and Miventure are two other options, both of which make this type of investment much more accessible to the average person.
Unlike AngelList, neither Fundify nor Miventure require you to be an accredited investor or to have startup experience. You can also get started with a much lower amount of money than AngelList requires. Fundify requires only a $10 minimum investment, while Miventure requires just $25 to start investing.
However, neither offers the type of managed or rolling funds that AngelList does. So if you'd prefer an easier way to build a diversified portfolio of startup companies, AngelList may be a better alternative.
Our hot take on AngelList
AngelList is a good option if you are an accredited investor and you want a simple way to gain exposure to startups. Its rolling and managed funds provide more diversification and an easier option for those who don't want to evaluate individual deals, while the wide variety of syndicates you can join to fund particular companies is also attractive for more experienced startup investors.
I’m in! How do I sign up for AngelList?
1. Sign up with MoneyMade
Investing in startups can be risky, so this type of investment should make up just part of your portfolio. If you're using many platforms to build a diversified pool of investments, MoneyMade makes it easy to track all of your assets in one place. Start by signing up with a MoneyMade account so you can easily monitor the performance of your AngelList investments along with the rest of your portfolio.
2. Visit AngelList and open an account
After opening your MoneyMade account, continue to AngelList and select "Join" You'll need to complete an application, which will include providing an email; your full name; information on how you are accredited; and details about whether you will be investing as an individual, a trust, a firm or a fund. You will also need to provide information about your investing goals; the amount of money you're hoping to allocate to investing in startups; and your reason for choosing to invest on AngelList Venture.
3. Provide proof you're an accredited investor
AngelList may require proof that you are an accredited investor. The company may wish to review: bank statements, tax forms, or a written confirmation form an attorney or an accountant.
4. Choose a fund or syndicate
After you have been approved to invest, you can browse rolling or managed funds as well as syndicates and can select an investment. You will have the opportunity to review fees and request additional information before investing.
5. Transfer money in and invest
You can fund your account via ACH or wire transfer and then put your money into different investments of your choosing. You will need to sign required documentation to make your investment and are not able to cancel after signing the papers.
6. Return to MoneyMade
Once you've invested, you can track the performance of your AngelList investments -- along with your investments on other platforms -- using MoneyMade's convenient dashboard.
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