from Hacker News

AngelList Braces for Rainy Days as Startup Seed Funding Falls

by pavornyoh on 9/15/16, 8:12 PM with 82 comments

• by swanson on 9/15/16, 9:03 PM

  > Investors can buy a share of the fund, called the Access Fund, for $100,000 or more.

  This is really interesting to me, but I wish it were at a $10k level. That would be a no-brainer shift for me to move some money going into Vanguard into this, but I'm in that weird spot where I'm not rich enough to have $100k to toss around but am maxing out a Roth IRA and looking for more upside.

• by rch on 9/15/16, 8:34 PM

  Weird article. AngelList is raising money to make new investments and reports an unrealized 46% IRR, and that somehow makes for a gloomy story.

• by malchow on 9/15/16, 9:24 PM

  The boom/bust assumption undergirding this Bloomberg article is belied by what AL is itself doing –– creating instruments that allow the private tech capital market to expand and contract in a fashion that is smoother and less stepwise.

• by mangeletti on 9/15/16, 9:55 PM

  I'm going to make a prediction. This isn't going to be popular, and it's only my opinion and doesn't constitute advice:

  This fund will not earn its investors a positive return.

• by logicallee on 9/15/16, 9:56 PM

  this is absolutely ridiculous. there is next to no seed funding in existence. Let me tell you how the seed market for startups is: imagine you had a orchard, right, but instead of apples it grew dollar bills, and you just had to water them or they wouldn't grow. Under this scenario a guy with acres of dollar-tree bills could not get funding to water them with some kind of farm equipment. That's the state of the startup world.

  You read all those PG essays about not dying? About bootstrapping? Well because it turns out the only way to capitalize a typical startup is to stand in front of your dollar-bill tree and urinate. Or organize some kind of free sporting event with the side effect of making people go piss on your trees. Then 97% of your trees die except the 5 you pissed on, but you can take them to the bank and next season repeat. That's how bad startup seed funding is.

  You could not literally fund money growing out of thin air.

  I sometimes think that the government should step in and fund these things (after all, even Tesla got gov't grants.) Because the private market sure as #@$% isn't.

  EDIT:

  This is already at -2 but I am keeping it without altering a word, because the downvoters are wrong and uninformed (or don't understand the analogy), and I am right and well-informed, also it's a good analogy. It's not even close. Here is an example of someone in Europe describing this precisely:

  https://news.ycombinator.com/item?id=12198883

  Notice the words "With a product like that, the second thing that we didn't expect was that we tripped the "too good to be true" sensor everywhere, raising doubts." (you might have to click parent from the comment I linked.)

  It's not as bad in silicon valley as it is in Europe. But it's not that far-off either. There is next to no seed funding in existence. This is a fact. Downvoting me won't change it. Now at -3 after posting this update. Still right. Still not changing a word.

• by contingencies on 9/16/16, 1:19 AM

  I feel like AngelList is a specialized social network with maximum utility ~10 years ago and for people who already know each other or are clearly in the same network, who basically use it as a less-spammy LinkedIn. I've had zero luck communicating with people over it and have frankly given up in favor of raising domestically here in China.

• by tedmiston on 9/15/16, 8:55 PM

  > Meanwhile, AngelList is adding new ways for people to get into private-company investing. With some 600 startups expected to raise money through the website next year, AngelList said it’s creating a sort of index fund for young companies that will hold shares in 100 to 200 startups. Investors can buy a share of the fund, called the Access Fund, for $100,000 or more.

  This could be interesting. I wonder if it will be restricted to accredited investors or offered to the layman?

  As always, of course there are no guarantees in startup returns, but spread over that many companies... well, I'm not sure what to expect. I guess it all depends on the returns and how they decide to pick companies. It could be a cool new take on index investing. Then again, I became wary of most things "cool" and "new" in investing.

• by mixedbit on 9/15/16, 8:29 PM

  Is seed funding or seed funding through AngelList falling?

• by hamhamed on 9/16/16, 5:48 AM

  I have a startup and want to raise money. It just feels like listing on Angellist won't do anything, and I'm better off doing "offline" (emails) traditional way of raising. It just feels like good deals are done through emails and meetings not through a portal. At least for now