5 ms·

Hey Look, Software Just Ate VC

127 points by joshuaxls 13y ago

Asparagirl 13y ago
So the Syndicate guys are kinda like real estate brokers, and AngelList is the MLS?
- prakster 13y ago
  Somewhat, but not quite...Real Estate brokers get a cash commission, not a piece of the home value. But the analogy comparing AngelList to an MLS makes sense.
  - Asparagirl 13y ago
    I'm not sure where you live, but in the US, the standard commission for a registered broker selling a house is six percent of the selling price of the house, not a flat fee. But yes, they do not get to keep that six percent in perpetuity.
    - TezzellEnt 13y ago
      Technically it's illegal to set commission rates, but 6 percent was the norm. In the Bay Area however, it's the new norm to offer 2.5-2.0% to Selling agents (those bringing buyers to the deal). I'm not sure exactly what the Listing agents put as the commission fee, but I'd imagine they're likely splitting it 50/50.
      - cschmidt 13y ago
        That wouldn't fly in Boston. I imagine the listing agent is also making 2.5%, giving a total of 5%.
    - ams6110 13y ago
      Standard commission for residential real-estate is in the 6 percent ballpark, but it's negotiable. It's also split between buyer's agent and listing agent, unless the listing agent brings the buyer (which may be considered a conflict of interest in some areas, but I'm not sure how it gets worked out). Sometimes a FSBO seller will offer to pay a buyer's agent 2.5% or so, unless they don't want to work with agents at all. It's a waste of money IMHO, but some people like to have an agent involved. I've had far better luck selling property on my own than using agents though.
    - lifeisstillgood 13y ago
      Six percent! What ! Any real estate agent in the UK offering that would get laughed out if town - 2% is common, 1% is realistically negotiatable
seldo 13y ago
Are these syndicates only now possible because of the crowdfunding provisions in last year's JOBS act, or is it just that nobody thought of doing things this way before?
- carlosrt 13y ago
  Naval probably hatched this plan when VC's screwed him in Epinions. Brilliant payback. In the USA one still can't crowdfund (from non-accredited investors) yet, but in a couple of months one will be able to share with the general public that they're fundraising. These raises are possible because of Rule 504, 505, & 506 of the SEC. Seed offerings: http://www.sec.gov/answers/rule504.htm http://www.sec.gov/answers/rule504.htm Series A: http://www.sec.gov/answers/rule505.htm http://www.sec.gov/answers/rule505.htm Series B & later: http://www.sec.gov/answers/rule505.htm http://www.sec.gov/answers/rule505.htm
wikiburner 13y ago
Holy shit was Syndicate good. Probably the best experience I had playing games as a kid (and my intro to Gibson, Stephenson, and Sterling), with the possible exception of Populous. Bullfrog was genius. If anyone with any say in the games industry is by chance reading this, I would easily pay $99+ for a "Shadowrun Returns" style remake of the game, instead of sequels to the mediocre, Syndicate in name only FPS they released last year: http://www.metacritic.com/game/pc/shadowrun-returns http://www.metacritic.com/game/pc/shadowrun-returns
- Negitivefrags 13y ago
  Here is the relevant kickstarter for you: http://www.kickstarter.com/projects/5livesstudios/satellite-reign http://www.kickstarter.com/projects/5livesstudios/satellite-... 26 hours left.
  - wikiburner 13y ago
    Wow, Ask and ye shall receive. Thanks for that. I guess I'd be a pretty big hypocrite if I didn't kick in the $99 now.
    - benologist 13y ago
      You may also like this: http://www.seantcooper.com http://www.seantcooper.com The guy who designed/programmed Syndicate is still making games.
bencollier49 13y ago
Not sure I completely understand this - what's the position in the States, can incorporated entities advertise the sale of stock to the public? In the UK that's basically the distinction between a limited company and public limited company (PLC). Gods help anyone who tried to find a way to sell stock in a limited company to the general public. Prison would beckon, I suspect.
- opendais 13y ago
  We can because of the JOBS act. Basically, if you have 1 million in assets or 200k/year in income, you can invest as a member of the general public.
- mdda 13y ago
  Actually, the UK is ahead of the US in equity (and debt) crowdfunding (the JOBS act is moving the US to the same place gradually). See, for instance, http://www.seedrs.com/ http://www.seedrs.com/ (or http://www.growingbusiness.co.uk/crowdfunding-your-next-source-of-capital.html http://www.growingbusiness.co.uk/crowdfunding-your-next-sour... for an overview).
  - bencollier49 13y ago
    I don't get how this isn't illegal. Limited companies are restricted from selling shares to the public. How do they get around it? EDIT: Scratch that, looks like the FSA green-lighted it. Wow.
lucisferre 13y ago
Can anyone show an example of what 20% of the carry would look like. I'm a bit unclear how much the advisor gets here and how much AngelList is getting (and what they are getting exactly).
- pkaler 13y ago
  Let's say the pre-money valuation of a startup is $4m and they raise $1m. The syndicate would own 20% of the company. Let's say the company exits for $20m. Let's ignore preferred stock and assume it's all common to make the math easier. The syndicate would get $4m. The first $1m would be payed back to the entire syndicate. The lead would get an additional 20% of the $3m or $600k. Then the rest of the $2.4m would be split amongst the syndicate. Read chapter 9 of Venture Deals for more detail.
  - beachstartup 13y ago
    > The first $1m would be payed back to the entire syndicate i'm not an expert but i believe the carry is the portion above and beyond the promised return - in this case, the syndicated invested $1m, the promised return (let's call it 10% a year) would then be $1.1m (let's call it a year of waiting). wouldn't the carry (the "bonus", basically) be 20% of $2.9m? or maybe these deals lack a promised return and define the carry as anything beyond returned principal?
lifeisstillgood 13y ago
This simply devalues startups and re-emphasises how startups are less disruption and much more a third way between job or student. Only a market where a flood of new, mostly indistinguishable entrants would be able to use an app for funding
fjordan 13y ago
This FAQ may be helpful for those less familiar with investing: https://angel.co/help/syndicates https://angel.co/help/syndicates

127 points by joshuaxls 13y ago

Asparagirl 13y ago

So the Syndicate guys are kinda like real estate brokers, and AngelList is the MLS?

prakster 13y ago
Somewhat, but not quite...Real Estate brokers get a cash commission, not a piece of the home value. But the analogy comparing AngelList to an MLS makes sense.
- Asparagirl 13y ago
  I'm not sure where you live, but in the US, the standard commission for a registered broker selling a house is six percent of the selling price of the house, not a flat fee. But yes, they do not get to keep that six percent in perpetuity.
  - TezzellEnt 13y ago
    Technically it's illegal to set commission rates, but 6 percent was the norm. In the Bay Area however, it's the new norm to offer 2.5-2.0% to Selling agents (those bringing buyers to the deal). I'm not sure exactly what the Listing agents put as the commission fee, but I'd imagine they're likely splitting it 50/50.
    - cschmidt 13y ago
      That wouldn't fly in Boston. I imagine the listing agent is also making 2.5%, giving a total of 5%.
  - ams6110 13y ago
    Standard commission for residential real-estate is in the 6 percent ballpark, but it's negotiable. It's also split between buyer's agent and listing agent, unless the listing agent brings the buyer (which may be considered a conflict of interest in some areas, but I'm not sure how it gets worked out). Sometimes a FSBO seller will offer to pay a buyer's agent 2.5% or so, unless they don't want to work with agents at all. It's a waste of money IMHO, but some people like to have an agent involved. I've had far better luck selling property on my own than using agents though.
  - lifeisstillgood 13y ago
    Six percent! What ! Any real estate agent in the UK offering that would get laughed out if town - 2% is common, 1% is realistically negotiatable

seldo 13y ago

Are these syndicates only now possible because of the crowdfunding provisions in last year's JOBS act, or is it just that nobody thought of doing things this way before?

carlosrt 13y ago
Naval probably hatched this plan when VC's screwed him in Epinions. Brilliant payback. In the USA one still can't crowdfund (from non-accredited investors) yet, but in a couple of months one will be able to share with the general public that they're fundraising. These raises are possible because of Rule 504, 505, & 506 of the SEC. Seed offerings: http://www.sec.gov/answers/rule504.htm http://www.sec.gov/answers/rule504.htm Series A: http://www.sec.gov/answers/rule505.htm http://www.sec.gov/answers/rule505.htm Series B & later: http://www.sec.gov/answers/rule505.htm http://www.sec.gov/answers/rule505.htm

wikiburner 13y ago

Holy shit was Syndicate good. Probably the best experience I had playing games as a kid (and my intro to Gibson, Stephenson, and Sterling), with the possible exception of Populous. Bullfrog was genius. If anyone with any say in the games industry is by chance reading this, I would easily pay $99+ for a "Shadowrun Returns" style remake of the game, instead of sequels to the mediocre, Syndicate in name only FPS they released last year: http://www.metacritic.com/game/pc/shadowrun-returns http://www.metacritic.com/game/pc/shadowrun-returns

Negitivefrags 13y ago
Here is the relevant kickstarter for you: http://www.kickstarter.com/projects/5livesstudios/satellite-reign http://www.kickstarter.com/projects/5livesstudios/satellite-... 26 hours left.
- wikiburner 13y ago
  Wow, Ask and ye shall receive. Thanks for that. I guess I'd be a pretty big hypocrite if I didn't kick in the $99 now.
  - benologist 13y ago
    You may also like this: http://www.seantcooper.com http://www.seantcooper.com The guy who designed/programmed Syndicate is still making games.

bencollier49 13y ago

Not sure I completely understand this - what's the position in the States, can incorporated entities advertise the sale of stock to the public? In the UK that's basically the distinction between a limited company and public limited company (PLC). Gods help anyone who tried to find a way to sell stock in a limited company to the general public. Prison would beckon, I suspect.

opendais 13y ago
We can because of the JOBS act. Basically, if you have 1 million in assets or 200k/year in income, you can invest as a member of the general public.
mdda 13y ago
Actually, the UK is ahead of the US in equity (and debt) crowdfunding (the JOBS act is moving the US to the same place gradually). See, for instance, http://www.seedrs.com/ http://www.seedrs.com/ (or http://www.growingbusiness.co.uk/crowdfunding-your-next-source-of-capital.html http://www.growingbusiness.co.uk/crowdfunding-your-next-sour... for an overview).
- bencollier49 13y ago
  I don't get how this isn't illegal. Limited companies are restricted from selling shares to the public. How do they get around it? EDIT: Scratch that, looks like the FSA green-lighted it. Wow.

lucisferre 13y ago

Can anyone show an example of what 20% of the carry would look like. I'm a bit unclear how much the advisor gets here and how much AngelList is getting (and what they are getting exactly).

pkaler 13y ago
Let's say the pre-money valuation of a startup is $4m and they raise $1m. The syndicate would own 20% of the company. Let's say the company exits for $20m. Let's ignore preferred stock and assume it's all common to make the math easier. The syndicate would get $4m. The first $1m would be payed back to the entire syndicate. The lead would get an additional 20% of the $3m or $600k. Then the rest of the $2.4m would be split amongst the syndicate. Read chapter 9 of Venture Deals for more detail.
- beachstartup 13y ago
  > The first $1m would be payed back to the entire syndicate i'm not an expert but i believe the carry is the portion above and beyond the promised return - in this case, the syndicated invested $1m, the promised return (let's call it 10% a year) would then be $1.1m (let's call it a year of waiting). wouldn't the carry (the "bonus", basically) be 20% of $2.9m? or maybe these deals lack a promised return and define the carry as anything beyond returned principal?

lifeisstillgood 13y ago

This simply devalues startups and re-emphasises how startups are less disruption and much more a third way between job or student. Only a market where a flood of new, mostly indistinguishable entrants would be able to use an app for funding

fjordan 13y ago

This FAQ may be helpful for those less familiar with investing: https://angel.co/help/syndicates https://angel.co/help/syndicates