Recently a syndicate lead posted such a clueless update on a startup (claiming their product passed a milestone it clearly did not, based on just reading their public updates), that I started doubting whether they've actually invested in it at all.
This made me question the platform. How do I even know these leads have invested my money in the startups they say they have?
But you can definitely make bad investments, just like on Robinhood. Except in angel investing, odds are you're never going to see that money again (like 1 in 20 startups makes it).
Also try to remember that you and the syndicate lead are most likely a tiny check to the company, so you aren't getting information rights. You're essentially just along for the ride. Buckle up.
In mid-2012, Naval Ravikant and Kevin Laws, AngelList's chief operating officer, were active in Washington in his support for the Jumpstart Our Business Startups Act (JOBS Act), a law that eased many of the United States' securities regulations with the aim of making it easier for companies to either go public or to remain private longer while continuing to raise capital.
Assets supported for investors on AngelList increased by 50% to $15 billion year-over-year in 2022.. [AngelList] turned to venture to fund its own growth — raising a $100 million Series B co-led by Tiger Global and Accomplice at a $4 billion valuation.. AngelList has 130 employees.However I wouldn't be at all surprised if the smallprint somewhere in a long chain of paperwork means that you will never get any financial return in your "investment". There are a few platforms and crowdfunding platforms that let retail investors put small amounts of money into startups and I have never heard of a single case, even from an anonymous netizen, of anyone getting money back from such a structure.
I'm not saying AL has that, but it's old enough now to where I'd be surprised if it didn't have that. Same is true for GitHub Sponsors, Patreon, GoFundMe, etc.
These platforms are all ripe for laundering imo. Investment or sponsorship funds go in dirty, and come out the other side as clean income complete with year end tax documents. Again, I'd be more surprised if this isn't happening on these platforms, but that doesn't mean the platforms are not legit either.
The company I know that got the funding I would not have invested that kind of capital in , ever.
Then again that’s VC for you, a long list of failed ventures and a shorter list of impressive huge returns on investment.
I subscribe to very conservative accounting principles, I get insanely fixed on burn rate, I cannot sleep at night if my company is in the red. If everyone thought like me innovation would be at a humanity level low. Huge credit to all founders, it is a big mind fuck.
The private syndicates on the platform is a different story. I would be very cautious with my money. If you don't know and trust the people in charge, you better off investing your money somewhere else. I doubt most of them can make meaningful returns, yet alone not losing money.
Just because AngelList can be trusted generally doesn't mean every entity on there can be trusted, there are always a chance for things to fall through whatever protection they have, and then you're on the hook.
Part of the problem re: updates is companies aren’t required to provide them. We’ve had individual syndicate investors reach out to us demanding to see our financials (even though they individually invested only $5-10k). Before they reached out directly to us I’m sure they went to the syndicate lead first.
TLDR: I don’t think it’s a scam. But it’s 100% frustrating that companies don’t always provide satisfying updates because (simply) no one is making them.
That doesn’t necessarily translate to trusting them with money though.