This week, three-year-old Kima Ventures, a Paris-based seed fund that backs one to two startups a week, made headlines for a new way that it plans to use AngelList, the popular platform for startups and investors. As Kima’s cofounder Jeremie Berrebi told me, the firm will invest $150,000 a shot in up to 50 startups in exchange for a 15 percent equity stake in each company. Kima says the funds will be transferred to each winning startup within 15 days. Companies have to apply for the money on AngelList.
Kima’s AngelList play may be the splashiest to date, but it’s one of a growing number of venture firms that’s looking for ways to work with AngelList in new and different ways.
Indeed, AngelList’s months-old Syndicate’s platform, which allows a “lead investor” to syndicate investments on a deal-by-deal basis in exchange for carry, seems to be bringing out the creative side of many investors.
Renowned VC Tim Draper, for example, told me recently via email that “I certainly plan to syndicate on AngelList.” Draper wasn’t specific about a timeline or his plans, but he said it’s all part of the natural evolution of things. “I want launching a company to be a snap,” including the funding process, he wrote.
Similarly Semil Shah, who manages a seed-fund called Haystack, recently voiced enthusiasm over Syndicates as we chatted over coffee in downtown San Francisco. “I’m not 100 percent sure how I’m going to use it,” he admitted, “but I’m definitely going to use it.”
Jeff Fagnan, a partner at Atlas Venture, which has invested in AngelList, says Atlas has “identified a dozen very influential serial entrepreneurs and angels in Boston who we think could [further spur the growth of the startup] ecosystem [locally], and we’re telling them that anything they invest in as a lead [using the Syndicates platform], we’ll invest up to an additional $250,000 per any of their projects.”
“I don’t think we know what kind of activity it will result in,” says Fagnan, but he says it beats “scout programs,” which he calls “archaic and wrong. It’s like, ‘You’re our scout. Bring us back some dealflow and we’ll throw you a few ducats.'” Atlas is open to anyone else joining a Syndicate that involves the firm. “We just want to promote as much early-stage innovation as possible,” he says.
The firms won’t be the first to publicly embrace the platform; in October, Foundry Group, the Boulder, Colorado-based venture firm, said that it plans to start investing in startups using Syndicates. But they seem to signal that VCs would rather experiment with the platform than let it cannibalize their business.
As Shah puts it, “After the noise of the launch of Syndicates, there’s going to long education process, and mistakes will be made. But we’ll definitely see a major venture capital firm” use the platform soon. “General frustration with [traditional] venture capital has been building up to the point that it’s inevitable,” he says.
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