Founded in 2010, AngelList Venture is an online funding platform revolutionizing angel investing by making the funding process easier for startups and more accessible for average investors. The platform enables startup founders to raise funds from angel investors through Roll Up Vehicles (RUVs), a novel concept that transcends traditional angel investment barriers.
What are Roll Up Vehicles?
Roll Up Vehicles (RUVs) are special purpose vehicles that help startups raise money from multiple angel investors with a single link. RUVs allow founders to circumvent the logistical issues of raising capital from many small-scale investors.
Traditionally, angel investing was limited to large companies and venture capitalists with deep pockets. Small investors couldn’t participate because having too many investors in a financing round resulting in logistical nightmares such as legal fees, administrative costs, and complicating a company’s cap table.
RUVs help bridge this gap by eliminating the direct connection between an investor and the startup. Up to 249 investors can subscribe to these special investment vehicles, and invest in a startup as a single unit.
Significant RUV Statistics
- Since its founding in 2010, AngelList has helped more than 12,000 startups raise money through their private RUVs.
- AngelList helped Uber raise seed capital back in 2010.
- AngelList has more than $10 billion in supported assets.
- Over 43% of the unicorns (SaaS startups with a $1 billion valuation. within 5 years) have been funded through AngelList.
- AngelList supports a Global Network of startups in the US, UK, Canada, and India.
Why are RUVs Helpful for Angel Investors?
RUVs are popular with both startup founders and investors for many reasons.
1. Lowered Entry Barrier
With an RUV, a founder can transcend the traditional logistical barriers and raise money from hundreds of angel investors. Through the RUVs, AngelList allows founders to compound fundraising capacity while diminishing cost and efforts.
A Roll Up Vehicle lowers the entry barrier for people wishing to become angel investors in their favorite startups. It increases the breadth and range of investment opportunities available for potential investors. The entry barrier to startup investing has been reduced to an affordable $1,000 with AngelList.
2. Accelerated Fund Raising
AngelList accelerates a founder’s ability to raise seed capital from multiple investors. It’s free to sign up, and the approval process takes less than 24 hours (with all the necessary information). Once approved, the founder sets up the private deal page, creates, and shares links to potential investors and operators.
Through the links, investors can join the RUV, pledge their investment, and send their funds electronically. Once an RUV hits the target and closes the funding round, AngelList turns over the funds to the company.
3. Seamless Funding
AngelList allows investors to connect their bank accounts and transfer the money they wish to invest. The platform uses ACH to eliminate expensive wire fees and provides investors with a dashboard to manage their investments.
The platform handles all the paperwork work, including Know Your Customer (KYC) compliance, distribution, and tax documents besides collecting the funds. Once the funding round closes, AngelList transfers the funds to the startup as a lump sum.
4. Clean Cap Tables
Traditionally, founders couldn’t raise seed money from an army of small check investors on a technicality. Onboarding tens of investors became an exorbitantly expensive affair as it involved creating and managing multiple SAFEs and convertible notes.
The resultant capitalization table would be incredibly complex even after a successful conversion. An extensive cap table is expensive, difficult to manage, and complicates future corporate actions, financing, and exits.
RUVs remove this obstacle by lumping all accredited investors into a single cap table entry. It eliminates the hassle of reaching out to multiple investors for signatures when you need to convert. With RUVs, up to 249 accredited investors can fund a project and raise $10 million in seed capital.
5. Huge Cost Savings
Using an AngelList RUV to raise seed capital lets founders increase the number of investors in a startup while lowering the administrative costs.
AngelList handles all the administrative tasks associated with your RUV without saddling you with high fees. Founders can opt for a No-Fee RUV and only pay the mandatory $1,000 state filing fees. Or opt for the $2,500 for a custom RUV which provides broader options.
AngelList estimates that a company that raises seed capital from 40 investors could incur administrative costs to the tune of $100K over its lifetime.
RUVs: The Future of Angel Investing
Roll Up Vehicles have changed the face of angel investing to allow startups to fund their operations quickly. They also provide lucrative, alternative investment opportunities to the general public. RUVs enable ordinary people to join the angel investing sector and reap huge returns in the lucrative startup market.