Typically, a startup will be collecting checks from many people like me along with, possibly, a few firms distinctly unlike me (in that they're professionalized and running someone else's money). Theoretically speaking, every conversation is independent of each other.
-
Show this thread
-
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.
1 reply 0 retweets 54 likesShow this thread -
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.
1 reply 0 retweets 51 likesShow this thread -
The cost of legal review and overall annoyance factor (having conversations, chasing down checks, etc) has historically made the minimum viable angel investment +/- $25k.
2 replies 2 retweets 85 likesShow this thread -
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.
6 replies 19 retweets 198 likesShow this thread -
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.
2 replies 11 retweets 139 likesShow this thread -
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.
4 replies 2 retweets 98 likesShow this thread -
Replying to @NoblePublius @patio11
There’s no carry for investors the startup brings itself. Atlas can create a shell LLC but doesn’t do all of the other legal, audit, tax, and accounting, distributions required for the next ten years.
3 replies 0 retweets 18 likes -
Replying to @naval @NoblePublius
This is correct. (Source: I work on Stripe Atlas. Which is extremely solicitous of having more startups use us, but is not optimized for producing thin wrapper companies, and likely never will be.)
2 replies 0 retweets 9 likes
As an aside: there’s an awful lot that LLCs can do. They can wrap apartment buildings. But we have some choices to make in now we optimize ours, and we designed around “This is an operating entity for an internet company.” (Have to say: “Ask a lawyer re: possible tradeoffs.”)
-
-
Haha adding this to discussion list too
0 replies 0 retweets 0 likesThanks. Twitter will use this to make your timeline better. UndoUndo
-
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.