Venture Capitalists May Hate AngelList, But They're Still Using It

AngelList, a sort of social network that brings entrepreneurs and investors together to talk about and fund deals, is more controversial than the average Joe might think. But one thing’s clear, top tier venture capitalists are using the site to find companies.

OATV Partner Bryce Roberts recently unsubscribed, citing too much noise in the email flow from the site, as well as a personal issue with the herd mentality of investors around certain deals. That created more yelling and personal attacks by bloggers than I’ve seen in a while (much of it rounded up here).

Most of the small angel investors I talk to love AngelList because it gets them information on some deals, and information is hard to come by when you aren’t a celebrity investor. But when I ask more well established investors about AngelList, they usually reply with something like “meh.”

What those investors are saying and what they’re doing appear to be two different things. According to date supplied to us by AngelList founder Babak Nivi, well known venture firms are requesting lots of introductions to companies (a first step towards investing). Here are the venture firms, ranked by number of introductions requested:

1. General Catalyst – 64 intros
2. Atlas Venture – 61 intros
3. Bessemer – 60 intros
4. First Round – 53 intros
5. Charles River – 44 intros
6. IDG Ventures – 41 intros
7. Partech – 40 intros
8. Accel – 40 intros
9. Andreessen Horowitz – 39 intros
10. Polaris – 39 intros
11. Index – 34 intros
12. Spark – 27 intros
13. Redpoint – 26 intros
14. High Line – 23 intros
15. GRP – 23 intros
16. Highland – 22 intros
17. Balderton – 21 intros
18. Metamorphic – 20 intros
19. DFJ – 20 intros
20. Floodgate – 19 intros
21. Mayfield – 17 intros
22. Sequoia – 16 intros
23. Matrix – 16 intros
24. Shasta – 14 intros
25. Google Ventures – 14 intros

This certainly suggests that someone at those firms are paying attention, and actively involving themselves in the AngelList process. Here’s what Josh Stein, a Managing Director at Draper Fisher Jurvetson, has to say about the value of AngelList in response to a question on Quora:

AngelList is an incredibly powerful platform for connecting entrepreneurs with capital and has rapidly become one of my best sources of early-stage dealflow. I read every summary the system sends me.

Here’s one reason AngelList is a big improvement for me: most entrepreneurs are all too familiar with how inefficient and time intensive a process raising capital can be but may not realize that this is also true for the investors. To make the best investment decisions I want to see as many deals as I can but the traditional method of companies contacting me by email, usually referred through someone we both know, imposes a non-trivial amount of overhead in that each intro then requires a followup – which is most often to politely decline – and which requires care to avoid offending any of the parties involved. This may only take 15-30 minutes but when you’re seeing 3-5 new deals/day, it adds up.

On AngelList, in contrast, I’m presented with a clear, crisp “elevator pitch” in the introductory email and further have access to a detailed summary with a single click. Because there is no human introduction involved at this stage, if the deal isn’t a fit I can just hit “delete” and move on. This is the best of both worlds – I can see as many deals as I want with none of the wasted time on the no-fits.

Very excited to see where Naval and Nivi take the system over time. I think they are really on to something here.

Why are these venture firms so active on the site? Nivi says two reasons – 1. There are startups doing Series As and beyond on AngelList.
2. Lots of VCs are co-investing with angels in Seed rounds.

Whatever their reasons, they’re using it. Even if they hate the fact that it exists.