One Crowdfunding Platform Is Behind 3 Billion-Dollar Startup Exits This Year
When Dollar Shave Club sold to Unilever, investors came out of the woodwork to remind us of their role in the success. In theory you only get one of those per fund, so hey, why not, take that victory lap.
It’s much rarer for a venture firm to experience three billion-dollar exits in a matter of five months. That is, unless you’re AngelList. Through its various funds and syndicates, the crowdfunding platform can lay claim to Dollar Shave Club, Twilio, which went public in June, and Cruise, which sold to General Motors in March.
To be more specific, AngelList manages a few funds, including Maiden Lane, a $25 million fund operated by AngelList. That fund put money into Cruise and Authy, which sold to Twilio for stock in 2015. Meanwhile, in October last year, the venture arm of Chinese investment firm CSC Group launched a $400 million seed fund on AngelList called CSC Upshot. That fund invested in Cruise through a syndicate. In addition, two of AngelList’s additional “managed funds” invested in Cruise. And a group of AngelList investors (through a syndicate led by Mike Jones) backed Dollar Shave Club via a secondary stock sale in 2015.
To give AngelList full credit for backing the three of the most successful exits of the year, I had a few questions, which AngelList Partner Lee Jacobs answered, and I paraphrased:
Q: How many venture-backed companies raise at least some money via AngelList these days? If the answer is “most of them,” then the platform can hardly take credit for picking winners.
A: Only a small portion of the companies with AngelList profiles actually raise money on the platform. AngelList estimates 15% of investments in early stage startups happen on its platform. (CB Insights tracked 886 early stage deals in the first quarter. AngelList syndicates do 120-150 deals a quarter.) For context, AngelList has backed 965 startups, which have gone on to raise $2.2 billion in follow-on capital.
Q: How many people from the “crowd” in AngelList’s crowdfunding model actually get access to these companies? (In other words, are the investors that are getting rich from big exits the same investors that are plugged into Valley deal flow and would have invested regardless of AngelList?)
A: These three deals earned a return for approximately 170 individual investors. Jacobs says its reasonable to assume the investors in these syndicates would not have been able to access these investments otherwise, given their willingness to pay carried interest to the syndicates in order to access them.
Q: How big of a piece of these exits did AngelList actually get? If one person invested $5,000 in a startup that Twilio acquired for stock last year, sorry, but that’s hardly worth shouting about.
A: This one is trickier to suss out. The company doesn’t release return data, and it’s hard to know how diluted they may have been in their exits. AngelList promises to release some aggregate performance data in the coming months.