6 Little Known Reasons Why Angel List Roll Up Vehicles are Game Changing for Founders & Investors
Journey

6 Little Known Reasons Why Angel List Roll Up Vehicles are Game Changing for Founders & Investors

Angel List (AL) is a transformational company that has democratized angel investing.

In March, the AL team launched their Roll-Up Vehicle (RUV) product which allows founders to easily and cost effectively enable access to accredited investors at a low barrier ($1K+) while keeping cap tables clean.

Journey has acted as a sales tool for over $20MM in fundraises over the past 5 months and I thought I would share some little known tips to help founders think through the reasons why they might choose this vehicle to facilitate angel investments from accredited investors in their company:

1) Speed -- you can be up and running within a day accepting checks from investors. The setup process requires some basic information about your company (legal name, terms of the round, AL usernames). Once you get approved which generally takes less than 24h, you setup a deal page and can create links to send out, which takes 30 mins. Once you fill your RUV allocation and close the deal, Angel List turnaround time to sign and fund your company could be as fast as 48-72 hours.

2) Cost -- it's almost free to do an RUV right now sans Blue Sky fees (~$1k) as Angel List is covering the usual $8k fee. Here is a nifty calculator to see your cost savings by using an RUV versus taking many individual checks over the lifetime of your company. Angel List estimations suggest that a seed stage company that is considering a RUV for 45 angels will save $75K over the lifetime of the company (when compared to the costs of allowing 45 direct investments)

3) Clean cap table -- 1 entity means there is no need to reach out to dozens of individuals for signatures in the future. You can have up to 249 accredited individuals invest in your company up to $10MM via an RUV (Please note: RUVs over $10MM have different limits based on accreditation status)

4) Easy process for your angels -- They signup via your link, fill in their investment amount, accredited status, sign off on terms and connect their bank while Angel List performs KYC, executes a direct ACH to save them wire fees, and gives them a dashboard to access documents/manage their investment over time.

5) Higher valuations — founders can charge a sustainably higher valuation to RUV investors since lack of carry and management fees means RUV investors can get same net returns even if investing at a higher valuation. From experience, this is less important to the individual $1K angel but considerably important for family offices writing larger checks ($100K+).

6) Founder friendly voting rights -- founders can retain voting rights on shares sold to RUV investors, instead of giving up voting rights on shares sold to syndicates/funds


If you are interested in RUVs, check out RUV Alliance where over 300 accredited investors discuss this topic in a discord and commit $ to companies if they open up RUVs. Here are some more founder resources we've packaged up in a Journey as it relates to Angel List RUVs.

Author

Brendan Weitz

Brendan is the co-founder of Journey and previously worked at companies like Quora, AdRoll, and Facebook. He enjoys 16 hour plane rides and misses living in Tokyo.

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