Practically speaking angels do not particularly desire to have entirely independent conversations about contractual terms, because they/we rationally believe almost all of the value created happens outside the contract, but even with standardized terms (SAFEs, etc) it toilsome.
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Meanwhile, lawyers have to review *everything*, because professionals are professionals and it would be extremely bad news if they missed "Oh whoops 6 years ago we actually promised an angel the moon and stars on a silver chain" in the runup to an IPO.
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The cost of legal review and overall annoyance factor (having conversations, chasing down checks, etc) has historically made the minimum viable angel investment +/- $25k.
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So here's the cool innovation: A startup I had promised a check to said "OK, we're doing our friends-and-family checks via an AngelList Special Purpose Vehicle." It's, effectively, an extremely specialized one-use one-time computer program which pretends to be a company.
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AngelList spins up a company. (In this case, the company receiving investment covers the costs here, which are non-trivial but much less than having 40+ parallel bespoke conversations with lawyers.) Angels invest in that company. That company invests in the target company.
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This means that the people who actually care about the terms angels get only have to review one set of terms, which is the terms being granted to the SPV by the company receiving investment. The SPV takes one line in the cap table (not 40+); decreases toil over life of company.
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And instead of the founders having to do their least favorite chore of "Hey Patrick, thanks for your commitment. We're closing soon so if you could please actually hit the wire button that would be great", ~100% of that is handled by cronjobs at AngelList.
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There are probably also some benefits on the backend, too. A startup I invested in back in 2012 exited. Yay! And I got several hundred pages of documents to review as a result of it. Absence of yay. The ideal UX here is "I trust you. There's a number. Pay me; I tell accountant"
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AngelList gets to have the operational teams and software which figure that out for the SPV, which centralizes thousands of otherwise pairwise conversations happening with lawyers and accountants, and then a piece of software spits out a) money and b) tax forms.
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Replying to @patio11
I'm not sure I get it, is it basically that: angellist had standard contract terms, so you can just assume their terms are good and scale to many investments?
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I'm even more impressed by the operational processes than by the standard terms, but there is some value created by "Well you're AngelList and a) you've clearly had the best lawyers review these and b) if anyone picks fight with you they're picking a fight with entire ecosystem."
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Replying to @patio11
I see. Makes sense. So it sort of brings down the minimal angel check a bit? What's your reckon on the smallest reasonable check on something like this?
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Replying to @penelope_zone
It depends; there's some people who if they offered you a dollar you'd figure out a way to take their dollar, right? Suffice it to say "Macbook money" perhaps not unreasonable.
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