Rishi Narang, AngelList Venture Hacker Trends from both the fundraising & investing trends from Silicon Valley to Asia and globally

1. Silicon Valley Trends

2. Fundraising & Talent Trends

3. AngelList is the world’s
largest marketplace for startup
investing & hiring

4. $425M 78K
INVESTED JOB MATCHES / MONTH
Fundraising Talent

5. Trends
• The Rise of the Early-Stage SPV
• The Rise of the Small LP
• The Rise of the Operator-Investor
• The Rise of the Student Founder
• The Rise of the Talent Marketplace

6. The Rise of the Early-Stage SPV

7. Special Purpose Vehicle
• An investment vehicle created for the purpose of
investing in a single company
• Historically used by investors for pro-rata opportunities
• SV Angel lead $200M Pinterest Series F via SPV in
2014

8. Key Differences
Funds SPVs
Up to 100s of investments 1 investment
GPs only decide companies GPs, LPs decide companies
Raised over several months Raised over days to weeks
Fast decisions Slower decisions
GPs control $$$ LPs control $$$

9. SPVs
• LPs
• Deal-by-deal investing
• No 10-year lockup
• Invest in the deal or partner – not the firm
• GPs
• Capital uncertainty
• Easier to raise

10. Players behind SPVs
• SeedInvest
• WeFunder
• FundersClub
• AngelList

11. Every great investment
starts with an angel

15. Syndicates

16. Tim Ferriss invests in Shyp

17. $ 2 5 K
Tim Ferriss invests in Shyp

18. $ 2 5 K$ 2 5 K
$ 7 2 2 K
Tim Ferriss’ syndicate invests in Shyp

19. 15%
5%
TIM’S
OUR CARRY
$ 2 5 K$ 2 5 K
$ 7 2 2 K
Tim Ferriss’ syndicate invests in Shyp

20. Metrics
Invested $425M
Active syndicates 210
Average investment $390K
Follow-ons $2.9B

21. $1B Exits for Late-Stage Syndicates

22. Why are SPVs growing?
• Limited Partners get deal-by-deal flexibility
• Companies are able to more easily raise from large
pools of small investors
• Operator-investors are empowered to become larger
investors

23. TAKEAWAY
Deal-by-deal investing is valuable for unlocking
investment capital
The Rise of the Early-Stage SPV

24. The Rise of the Small LP

25. Online Investing
• Large groups of small LPs investing $1k each
• Historically, large LPs have provided the vast majority
of investment capital

26. Case Study: Lending Club
• World’s largest peer-to-peer lending platform
• How it works
• Customers apply for a loan
• LendingClub determines credit rating & interest
rates
• Investors select loans

27. Loan Volume
$0B
$2B
$4B
$6B
$8B
$10B
2012 2013 2014 2015
Self-managed individuals
Individuals indirect
Institutional
Case Study: Lending Club
Source: Lending Club Statistics (https://www.lendingclub.com/info/statistics.action)

28. Case Study: Lending Club
• Lending Club
• $20.7B loaned through June 2016
• $8.3B loaned in 2015
• U.S. consumer credit market
• Total size: $3-4T
• Addressable size: Roughly $400B
• P2P lending 72% larger per capita in UK

29. Case Study: Lending Club
Small investors in aggregate can take significant
market share from large incumbents
TAKEAWAY

30. Key Differences
Large LPs Small LPs
Invest millions of dollars
Invest hundreds or thousands of
dollars
Pension funds, endowments,
family offices, etc.
Tech employees, consultants,
bankers
Weeks or months to close Days or weeks to close
Seed & above Pre-seed & above
Uninvolved with portfolio Can be value-add

31. Small LPs
• Value-add investors don’t need significant capital or
proprietary deal flow
• Can directly help with brand/marketing

32. Platform Investors
Investment
Volume
Companies
SeedInvest
(since 2013)
- $50M 70
FundersClub
(since 2012)
17k $63M 200
CircleUp
(since 2012)
- $260M 200
AngelList
(since 2013)
5k $410M 1000
Traction

33. Democratizing Startup Investing
• SPVs have unlocked small investors as a fast-growing
pool of capital
• SPVs help companies avoid large cap tables
• Recent years: accredited investors
• May 2016: Title III Equity Crowdfunding

34. Title III Equity Crowdfunding
• Anyone can invest in startups
• Designed to protect lower-income investors
• Annual investment limits
• Company reporting requirements
• No SPVs

35. Concerns
• “Least knowledgable investors + worst companies”
• Investors can be protected, but they’re ultimately
responsible
• Why might there be adverse selection?
• Small investors may be a privacy risk
• Fundraising may be significantly more work
• AngelList’s vetting solution: syndicate leads

36. Online Investing at Scale
• Companies get better access to investors (capital &
value)
• Investors get access to a new asset class with top
deal flow

37. TAKEAWAY
There is a huge opportunity for small investors to
provide significant capital & value
The Rise of the Small LP

38. The Rise of the Operator-Investor

39. Key Differences
Professional Investors Operator-Investors
Invest full time Invest part time
May or may not have prior
operational experience
Have full-time operating jobs as
founders/executives
2-3 to dozens of deals annually A few deals annually
Invest systematically
Invest opportunistically into their
close networks

40. Operator-Investors
• Dave Morin
• Elad Gil
• Matt Mullenweg
• Gil Penchina & Flight.vc

41. Dave Morin
• Past: Apple (2004), Facebook (2006), Path (2010)
• Expertise: social networks, platforms, product, mobile,
design
• Board Member @ Eventbrite (2012)
• Now: Founder & Partner @ Slow Ventures – $65M Fund IV
(2015)
• 50+ personal investments since 2009
• Highlights: Social (Venmo, Hearsay Social, Yobongo, Tilt),
Luxe, Artsy, Birchbox

42. Elad Gil
• Past: Google (2004), Mixer Labs (2007), Twitter (2009)
• Expertise: scaling product/operations, biology,
mobile, analytics, internationalization, M&A
• Now: Co-Founder @ Color Genomics (2013)
• 50+ investments since 2008
• Highlights: SaaS/Dev (Stripe, Optimizely, Mailgun),
Commerce (AirBnB, Square), Social (Pinterest)

43. Matt Mullenweg
• Now: Founder & CEO @ Automattic (WordPress)
• Expertise: open source, distributed teams, scaling,
community, content management
• 35+ personal investments since 2008
• Highlights: Makerbot, About.me, ZenPayroll,
SendGrid, Wealthfront

44. Flight Ventures on AngelList
• Gil Penchina, Shawn Merani, and Alec Hsu
• Network of ~25 value-add partners, including current &
former CEOs, CMOs, etc.
• SaaS Startups by Flight.vc
• Nathan Creswell (Product Director @ Zuora)
• Bitcoin by Flight.vc
• Nick Sullivan (CEO @ ChangeTip, acquired by Airbnb)

45. Operator-Investors on AngelList
“AngelList has become a place where value added
investors who don’t have access to capital, and aren’t
full time VCs, can access capital and enable investors
who are outside Silicon Valley to join these high quality
deals”
- Zach Coelius, Flight.vc, Former Founder/CEO of Triggit
Source: AngelList: Inside the Deal (https://blog.angel.co/inside-the-deal-zach-coelius-investments-in-cruise-and-branch-metrics/)

46. TAKEAWAY
Successful entrepreneurs have operational expertise and
high quality networks of founders.
With the right resources, they can become key investors.
The Rise of the Operator-Investor

47. The Rise of the Student Founder

48. Background
• Mark Zuckerberg started Facebook at Harvard
• Evan Spiegel started Snapchat at Stanford
• Matt Mullenweg started WordPress at Houston
• Others: Birchbox, Warby Parker, Reddit

49. Why Students?
• vidRover: indexing videos on the web using computer
vision
• Founded by 2 Columbia PhDs
• Immudicon: training the body’s immune system to fight
cancer & other deadly diseases
• Founded by Dartmouth molecular biology undergrad
• Students study the cutting-edge and think big

50. Supporting Student Founders
“If you think of dropping out of school as being the
precursor to starting a company, that makes starting a
company very limited to a small set of students who
have the safety net.”
– Rei Wang, Director of Dorm Room Fund
Source: https://blog.mixpanel.com/2016/08/25/student-entrepreneurs/

51. Supporting Student Founders
• Student Associates/Ambassadors (Sequoia, KPCB, Alsop-
Louie Partners)
• Student Summer Programs (Highland Capital, Lerer Ventures)
• School Funds (The House Fund, A-Level Capital)
• In progress: UT Austin, Carnegie Mellon
• School Programs (Princeton Entrepreneurship Council,
Various Entrepreneurship Labs)
• Shift: dropping out → in-school support

52. Students as VCs
• Dorm Room Fund
• Rough Draft Ventures
• 500 Rookies
• Model
• Backed by larger VCs
• Students investing in students
• Carry goes back into the ecosystem

53. Traction
• Rough Draft Ventures: 50+ companies
• Dorm Room Fund: 100+ companies
• Highlights
• Blockstack Labs: $1.5M (YC, USV, SV Angel)
• Lily: $15M raised (Spark Capital, SV Angel)
• FiscalNote: $28M raised (Renren, NEA)
• Beepi: $150M raised (Redpoint Ventures, Sherpa Ventures)

54. TAKEAWAY
Student founders live in a creative environment that nurtures
innovation and can make a huge impact.
The Rise of the Student Founder

55. The Rise of the Talent Marketplace

56. Talent Ecosystem
• Job boards (Indeed)
• Candidate search (LinkedIn)
• Recruiters on demand (RecruitLoop)
• Applicant tracking systems (Greenhouse)
• Talent marketplaces (Hired)
• Freelance/contract marketplaces (Upwork)
• Resume tools (Kickresume)
• Interview preparation (interviewing.io)

57. Recruiters
• Source candidates via LinkedIn, social media, job
boards, referrals, etc.
• Evaluate candidates
• Track candidates in the recruiting pipeline

58. Talent Marketplaces
• Recruiting firms at scale
• Candidates sign up & fill out their profiles
• Companies indicate interest in candidates
• Platforms monetize successful placements

59. Talent Marketplaces
• Hired: 2000+ companies (Forbes, Groupon,
TransferWise)
Founded 2012
• Vettery: 1500+ companies (JP Morgan, Jet, eBay)
Founded 2013
• Indeed Prime: Facebook, Uber, Dropbox
Launched by Indeed in 2015
• A-List: Pokemon Go, Bloomberg, Postmates
Launched by AngelList in 2016

60. Talent Marketplaces
• Productize or outsource recruiter responsibilities
• For companies
• Cheaper per hire
• Shorter placement times
• High-quality candidates
• For candidates
• Less time spent job hunting
• More companies & offers
• More educated decisions & better matches

61. What’s driving demand?
• LinkedIn: online professional profiles
• Recruiting practices deeply ingrained
• Better data + matching algorithms

62. What’s driving demand?
• Hiring can be a huge bottleneck for fast-growing
companies
• Startups don’t want to miss great candidates
• More competition

63. TAKEAWAY
Talent marketplaces can help companies & candidates
move faster and make better decisions
The Rise of the Talent Marketplace

64. Takeaways

65. Takeaways
• Deal-by-deal investing is valuable for unlocking
investment capital

66. Takeaways
• Deal-by-deal investing is valuable for unlocking
investment capital
• There is a huge opportunity for small investors to
provide significant capital & value

67. Takeaways
• Deal-by-deal investing is valuable for unlocking
investment capital
• There is a huge opportunity for small investors to
provide significant capital & value
• Successful entrepreneurs have operational expertise &
high-quality networks of founders; with the right
resources, they can become key investors

68. Takeaways
• Deal-by-deal investing is valuable for unlocking
investment capital
• There is a huge opportunity for small investors to
provide significant capital & value
• Successful entrepreneurs have operational expertise &
high-quality networks of founders; with the right
resources, they can become key investors
• Student founders live in a creative environment that
nurtures innovation and can make a huge impact

69. Takeaways
• Deal-by-deal investing is valuable for unlocking
investment capital
• There is a huge opportunity for small investors to
provide significant capital & value
• Successful entrepreneurs have operational expertise &
high-quality networks of founders; with the right
resources, they can become key investors
• Student founders live in a creative environment that
nurtures innovation and can make a huge impact
• Talent marketplaces can help companies & candidates
move faster and make better decisions

70. Global Sector Trends:
Cooling Down

71. Food Delivery
• Grocery Delivery
• Instacart, Door to Door Organics, Thrive Market,
AmazonFresh
• Meal Delivery
• UberEats, Caviar, Sprig, Postmates, DoorDash,
Grubhub, Munchery, Prime Now
• Meal Kit Delivery
• Blue Apron, HelloFresh, Plated

72. Food Delivery
Source: CB Insights (https://www.cbinsights.com/blog/food-delivery-startups-funding-trends-2016/)

73. Food Delivery
Source: CB Insights (https://www.cbinsights.com/blog/food-delivery-startups-funding-trends-2016/)

74. 2016 Shutdowns
• SpoonRocket (integrated into iFood in Brazil)
• Ola Cafe (food) & Ola Store (groceries)
• PepperTap

75. Global Sector Trends:
On the Rise

76. Healthcare AI
Source: CB Insights (https://www.cbinsights.com/blog/artificial-intelligence-healthcare-startups-funding-trends/)

77. Healthcare AI
• 2014: 47 deals globally
• 2015: 60 deals
• Q1 2016: 30 deals

78. Healthcare AI Market
• Genomics (Deep Genomics)
• Wearables (AiCure)
• Medical Imaging (Bay Labs)
• Drug Discovery (Atomwise)

79. Atomwise
• Find cures faster via algorithmic drug discovery &
evaluation
• $2B,15 years to discover & develop new drugs
• AtomNet’s could save half of early stage drug
screening experiments
• $6M Series A in June 2015 with Khosla Ventures,
DFJ; previously YC

80. Source: CB Insights
Auto Tech
• 2014: $354M raised globally
• 2015: $556M raised globally
• H1 2016: $467M raised globally
• 2016 Exits
• Lytx acquired by GTCR ($500M)
• Cruise Automation acquired by General Motors
($1B)

81. Auto Tech Market
• Self-Driving Technology (Cruise Automation)
• Vehicle-to-Vehicle Communication (Peloton)
• Security (Argus)
• Telematics & Fleet Optimization (Zendrive)

82. Zendrive
• Uses mobile data to measure driver behavior
• Produce actionable insights for fleets
• Automatic Collision Detection developed with BMW
• UIUC study verified accuracy of mobile data
• 13.5M Series A in February 2016 lead by Sherpa
Capital

83. Auto Tech
“With a company like Cruise, worst case scenario,
especially for a seed round, is that you are going to 5X
your money because there are so many acquirers.”
– Tikhon Bernstam, investor in Cruise Automation
Source: AngelList: Inside the Deal (https://blog.angel.co/inside-the-deal-tikhon-bernstams-investment-in-cruise/)

84. Real Estate Tech
Source: CB Insights (https://www.cbinsights.com/blog/real-estate-tech-startup-funding-trends-q2-2016/)

85. Real Estate Tech
• 2014: $1.1B raised, 174 deals globally
• 2015: $1.9B raised, 212 deals globally
• H1 2016: $1.8B, 108 deals globally

86. Brendan Wallace on Real Estate
• Background
• 5 years in real estate at Blackstone, Goldman Sachs
• U.S. Real Estate Market
• 13% of US GDP ($40T asset class)
• One of the lowest spenders on IT
• Corporate software
• Paper/excel → mobile/cloud/data-enabled software
Source: AngelList: Inside the Deal (https://blog.angel.co/inside-the-deal-brendan-wallaces-investment-in-clutter/)

87. Real Estate Tech Market
• Residential & Commercial
• Marketplaces (Opendoor)
• Crowdfunding (RealtyShares)
• Property Management (Cozy)
• Listing & Search (Zumper)
• Mortgages (Blend)
• Virtual Viewing (Floored)

88. Opendoor
• Making buying & selling houses a better experience
• Sellers: receive an offer immediately & Opendoor
handles the rest
• Buyers: buy a home with a transparent process
• $80M Series C in October 2015, $100M raised to
date
• Khosla Ventures, GGV Capital, Access

89. @narang_rishi
Thank you