5 ms·

I would be willing to buy into a crowdsourced VC fund- I give money to the fund for a slice of it, which in turn vets and invests in early stage startups. They

I would be willing to buy into a crowdsourced VC fund- I give money to the fund for a slice of it, which in turn vets and invests in early stage startups. They hit a big payout, my slice becomes more valuable. The thing is, I don't want to do any work. I want someone else to do the vetting and the paperwork to invest. Obviously, they get a bigger piece of pie. Basically, I want an index fund for early stage startups. It would be high-risk, but it's the same risk (in principle) as VC firms have.

hkmurakami 9y ago
Iirc VC as an industry loses money (or has poor returns), with the top 10 firms dominating the returns and some small number of startup firms posting great returns (iirc this is from a Jason lwmkin's post) So i think your index fund performs quite poorly.
- petra 9y ago
  Are there any viable ways to open the top-10 for investment by bug funders ?
  - jerf 9y ago
    I suspect that what you're seeing is basically than the large firms are successful enough and funded enough so they don't need more money that they "negotiate" themselves 100% of the value. What can you bring one of the top-10 investors that they don't already have, such that they'd be willing to share the benefits with you?
  - hkmurakami 9y ago
    No they are oversubscribed. They won't take our money even if we beg them.
logicallee 9y ago
Why do you say it would be high-risk?
- badloginagain 9y ago
  Early stage startups are high-risk, due to how many early stage startups fail. A collection of early stage startups inherits the risk. Basically you're hoping that a single success covers the losses of the failed startups in its cohort.
  - deleted 9y ago
    [deleted]
corford 9y ago
I think Syndicate Room is about to (or already does?) offer something like this.
ThomPete 9y ago
Angelist does that
Tokkemon 9y ago
Isn't that essentially a hedge fund specializing in startups?
andygcook 9y ago
This is what AngelList essentially does with their newly launched AngelFunds platform. You back an operator (typically other entrepreneurs) as basically an LP and they invest your money for you: https://angel.co/angel-funds https://angel.co/angel-funds It's different from AngelList syndicates, which have been around for awhile: https://angel.co/syndicates https://angel.co/syndicates With syndicates, you get access to the deal flow of the person's syndicate you support, but you still have to decide to back each individual deal and for how much yourself. It still takes some work on your end. In case anyone's wondering... the benefit of a syndicate as a startup is that it allows you combine smaller investors into one combined entity on your cap table. If you were to just take a lot of smaller checks, you might end up with dozens, if not hundreds of individuals you now have to do paperwork for, collect money from and thereafter manage on your cap table indefinitely. Syndicates make the process much faster and easier to manage. We did a syndicate for my startup, Tettra: https://angel.co/tettra https://angel.co/tettra Using a syndicate we were able to add ~10 smaller angels to our round that we probably wouldn't have otherwise brought in. The interesting thing now too is that probably about half of those people are some of our most helpful investors.
scott00 9y ago
This was legal even before the JOBS act. A registered investment company is an accredited investor, and is allowed to sell shares to individual investors. Several companies have tried the business model, none (to my knowledge) with great success. See https://dealbook.nytimes.com/2012/08/29/gsv-capital-placing-bets-on-start-ups-falters/ https://dealbook.nytimes.com/2012/08/29/gsv-capital-placing-...

hkmurakami 9y ago

Iirc VC as an industry loses money (or has poor returns), with the top 10 firms dominating the returns and some small number of startup firms posting great returns (iirc this is from a Jason lwmkin's post) So i think your index fund performs quite poorly.

petra 9y ago
Are there any viable ways to open the top-10 for investment by bug funders ?
- jerf 9y ago
  I suspect that what you're seeing is basically than the large firms are successful enough and funded enough so they don't need more money that they "negotiate" themselves 100% of the value. What can you bring one of the top-10 investors that they don't already have, such that they'd be willing to share the benefits with you?
- hkmurakami 9y ago
  No they are oversubscribed. They won't take our money even if we beg them.

logicallee 9y ago

Why do you say it would be high-risk?

badloginagain 9y ago
Early stage startups are high-risk, due to how many early stage startups fail. A collection of early stage startups inherits the risk. Basically you're hoping that a single success covers the losses of the failed startups in its cohort.
- deleted 9y ago
  [deleted]

corford 9y ago

I think Syndicate Room is about to (or already does?) offer something like this.

ThomPete 9y ago

Angelist does that

Tokkemon 9y ago

Isn't that essentially a hedge fund specializing in startups?

andygcook 9y ago

This is what AngelList essentially does with their newly launched AngelFunds platform. You back an operator (typically other entrepreneurs) as basically an LP and they invest your money for you: https://angel.co/angel-funds https://angel.co/angel-funds It's different from AngelList syndicates, which have been around for awhile: https://angel.co/syndicates https://angel.co/syndicates With syndicates, you get access to the deal flow of the person's syndicate you support, but you still have to decide to back each individual deal and for how much yourself. It still takes some work on your end. In case anyone's wondering... the benefit of a syndicate as a startup is that it allows you combine smaller investors into one combined entity on your cap table. If you were to just take a lot of smaller checks, you might end up with dozens, if not hundreds of individuals you now have to do paperwork for, collect money from and thereafter manage on your cap table indefinitely. Syndicates make the process much faster and easier to manage. We did a syndicate for my startup, Tettra: https://angel.co/tettra https://angel.co/tettra Using a syndicate we were able to add ~10 smaller angels to our round that we probably wouldn't have otherwise brought in. The interesting thing now too is that probably about half of those people are some of our most helpful investors.

scott00 9y ago

This was legal even before the JOBS act. A registered investment company is an accredited investor, and is allowed to sell shares to individual investors. Several companies have tried the business model, none (to my knowledge) with great success. See https://dealbook.nytimes.com/2012/08/29/gsv-capital-placing-bets-on-start-ups-falters/ https://dealbook.nytimes.com/2012/08/29/gsv-capital-placing-...