AngelList Intros

Connecting early-stage startups with investors

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#2 Product of the WeekApril 28, 2016
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Parker ThompsonMaker@pt · Startup Fanboy
I work on Intros with some other awesome folks at AngelList. Happy to answer questions.
Danny Espinoza@abcdannye · Founder @looksyvideo
@pt Love this, I've often wondered why it wasn't easier to socialize an upcoming raise and this looks like it's fits the bill. Quick q: if you aren't matched can you re-apply (eg when you are further down the road, more traction, etc)?
Parker ThompsonMaker@pt · Startup Fanboy
@dannyjespinoza yes. we're saying every six months. What we don't do well due to volume is actually helping you understand that you're too early and what milestones you need to hit. Most startups I see fail to raise fail because they shouldn't be raising yet. Hopefully we can solve that problem in the future.
Loren Sands-Ramshaw@lorendsr · CTO @parlay
@pt Great product SLJ, thanks for joining AL and making it! 😄 > because they shouldn't be raising yet Do you see any room in the market with angels or pre-seed funds for earlier, pre-traction startups? The traction bar keeps raising on the seed round or even incubators (in the extreme case, YC going from all idea-stage companies to ones with 1M in funding), and it can be hard to get to that bar without wealthy friends & family. Incubators and YC Fellowship certainly help address it, but maybe there can be more. The demand side is clearly filled 😜 I'd guess the largest block on the supply side to be the sheer quantity – I've been hoping for something like a shared YC-like application & recorded interview that allows investors who want to be FMI to differentiate among the masses provides by providing some amount of vetting and proof. Perhaps instead of only taking the 1% with double-digit growth, you could widen to the best 3% of applications+calls, and only send the 2nd and 3rd percentiles to those interested in earlier early stage? (And maybe provide a section of AL with those 3% that investors could search through and request the full application of? Or just see the full application, depending on the startup's pref.) But maybe there's not enough supply interest for this. Re: feedback, AL's comments would certainly be valuable to investors looking at the 3% AL site, but it would be really nice (as you're hoping) to be able to go the Foundry Group route instead of the YC route and at least say something short and general about why not, like "We think the market might not be big enough" or "For a consumer social app, we find it hard to get angels interested without X users or Y growth".
William McGowan@wrytre · Co-Founder, PAGEOY
@jrpickhardt @pt @dannyjespinoz Thanks, Jeff, for standing up and speaking to the early-stage startup conundrum. It is a chicken and egg situation with a Catch-22 attached. As investors go, why think in millions when all some folks need is a few $100K to kick things forward. Micro loans work in third-world job creation and promote self-sufficiency. Perhaps that concept needs to be applied to promising, well-thought out, well-executed start-ups. If it crawls, maybe it just needs a little help to walk and then run.
Parker ThompsonMaker@pt · Startup Fanboy
@jrpickhardt @dannyjespinoza I think you may misunderstand this product and our process. We don't expect consistent growth. Most of the startups we're speaking with are focused on product-market fit, not growth. Growth is typically a focus of companies post-seed or post-A. We're looking for companies appropriate for early stage investors, which may be as early as idea stage for some verticals where that is appropriate. With respect to success/failure, we may have a disagreement. I reject the premise that market needs are unmet because investors make mistakes. Some may, but the nature of markets is that they fill needs that can be filled economically, so if one investor fails another will certainly succeed. Some markets just don't exist. With respect to lean, lean is simply the scientific method applied to startups. Some may require millions of dollars or more to test the hypothesis. That's fine, and not incompatible with lean. If your suggestion is that startups should not validate their business models with data as quickly and efficiently as possible, we disagree.
Ryan HooverPro@rrhoover · Founder, Product Hunt
AngelList, which started as an email list like Product Hunt and many others, has an interesting evolution. I love how they're working toward a more efficient funding marketplace (which is broken in comparison to many other industries). @pt - how are choosing startups to intro to investors now?
Parker ThompsonMaker@pt · Startup Fanboy
@rrhoover Yes! Around the office we talk about this product as taking us back to our roots. It's a little more tech-mediated these days for scale/efficiency, but there's a lot of power in simple tools. In terms of how we choose, this is a challenging and subjective process and I'm sure we make mistakes. With that caveat, we review applications folks submit and offline referrals (our next release should make that better). Our goal is to find companies we believe match what investors are looking for. Our bar is that a firm should look at a company, vs having conviction ourself that we'd put our own money in. That allows us to have a very lightweight process. We look at the application and look for something interesting that merits a conversation. That's usually team, or market, or traction. If your team is super interesting, we'll usually reach out. If you're in a big and exciting market, that's worth looking hard at. If we don't really understand, but you have a bunch of people paying you $75k/yr on contracts, we'll probably give you a call. The first pass is an art more than a science. We try not to miss winners (though I'm sure we mess up). We then do a quick call. We se funded deals all day long, so we have a great sense of the market. When we talk to startups, our goal is just to understand the business and the approach. If it seems like they're doing something interesting and would be able to raise venture capital, we make the intros. If not, we give them feedback on the market and advice on how we'd go about the process.
Ben Tossell@bentossell · Partner, The Upstarters
Oohhh interesting :) Current rough guidelines are: - Technology companies - Technical founders - Impressive founders - Traction - Market - Clarity of vision - US or Europe
Parker ThompsonMaker@pt · Startup Fanboy
@bentossell definitely tech companies, and we're US focused for now since there's manual work and a lot of trust involved amongst the people. Great founders and a big market is a must, since this is focused on VC-scaled outcomes. Clarity of vision is maybe what I like to call "strong opinions," and we like those ;). Traction is less important, particularly for pre-seed companies or founders with a track record. But, in general the best candidates have some early customers and can demonstrate that someone actually wants what they're making. That could be a few customers in an unpaid pilot for some enterprise startups, or a few thousand dollars in MRR for an SMB or consumer business. These requirements are a reflection of the market. We are looking for companies that are ready to raise. Most of the reason we reject companies in this process is that they apply too soon. Knowing when to raise is a problem we solve indirectly. Maybe in the future we'll address that a bit more directly.
Ben Tossell@bentossell · Partner, The Upstarters
@pt awesome! Do you think it would be good to have some hypothetical examples of 'fake companies' on the landing to show what likely causes a rejection? And in those cases, could be some resources to help them get to that stage and reapply [EDIT] - just saw your response to ryan "If not, we give them feedback on the market and advice on how we'd go about the process."
Charlie Hinojosa@charliehinojosa · Founder, CEO at Sightbox & Tapp That App
This is great. What's the turnaround time to get a response on this? A lot of times these things go into a black hole - not that AngelList has been known to do that. Just curious.
Parker ThompsonMaker@pt · Startup Fanboy
@charliehinojosa we're decent at getting a reply in a week and shoot to keep on top of this. It may take a little longer this week with the PH launch ;). Usually fundraising is a several month process. Starting with us at the beginning is a good plan. We can talk, then send the company out when it's ideal for them.
Charlie Hinojosa@charliehinojosa · Founder, CEO at Sightbox & Tapp That App
@pt right on. It's great to see this on PH. Good luck.
Erik TorenbergHiring@eriktorenberg · Former Product Hunt
@pt congrats on the launch! What do you think is one of the biggest challenges to making this work well? What does success look like here?
Parker ThompsonMaker@pt · Startup Fanboy
@eriktorenberg this is a marketplace. We think a lot about trust on the investor side and are therefor very selective on what we send to them. On the startup side, we think we've done a great job with the experience, but we worry about sustained quality. Without great companies, this doesn't work. This is great product for any startup raising as it can put 10-20 awesome investors in your inbox, but often those folks just take intros from whatever VC finds them first. That works, but we need to convince them to run their own process and that we should be part of it.