Technology

AngelList goes big with private equity acquisition


AngelList, a prominent organization in the startup ecosystem, is making a strategic move into the private equity space with the recent acquisition of fintech startup Nova. This acquisition marks AngelList’s foray into a new market and demonstrates its commitment to expanding its suite of products and services for venture firms, investors, startups, and fund managers.

Founded in 2010, AngelList initially started as a mailing list for high-quality angel investors. However, it quickly evolved into one of the most powerful fundraising channels for early-stage startups. Today, AngelList positions itself as an organization that creates innovative products and services to accelerate innovation in the startup economy. With a focus on building the infrastructure that powers the startup ecosystem, AngelList has continuously adapted its model to meet the changing needs of the industry.

AngelList’s expansion into private equity may seem like a departure from its original venture focus. However, CEO Avlok Kohli sees it as a logical and natural progression for the company. He believes that as startups mature, their capital providers expand beyond venture funds into private equity and eventually the public markets. By broadening its scope to include private equity, AngelList aims to support startups throughout their entire lifecycle.

To kickstart its private equity efforts, AngelList acquired Nova, a Y Combinator-backed fintech startup specializing in investor management software for institutional private funds. Nova’s expertise and established customer base make it a valuable addition to AngelList’s portfolio of products. The acquisition aligns with AngelList’s goal of providing a unified software stack that streamlines operations for venture firms and private equity funds.

As part of the acquisition, Nova will continue to operate as a business unit within AngelList. Its investor management products will be integrated into AngelList’s suite of offerings, including the newly launched AngelList Transact. This integration will enhance AngelList’s presence in the private markets industry and accelerate its growth in serving institutional funds. Nova’s digital subscriptions, data room, and investor portal will be rebranded as AngelList products, further expanding the company’s range of services.

AngelList has experienced significant growth in recent years. In 2022, assets supported for investors on AngelList increased by 50% to $15 billion. The number of startups funded on the platform also grew by 21% to 8,300. These positive metrics indicate an upward trend in AngelList’s revenue, although specific figures were not disclosed. The company generates revenue through various sources, including subscription and SaaS fees, as well as carried interest.

AngelList’s expansion into private equity is just one example of its ongoing efforts to provide comprehensive solutions for the startup ecosystem. The company has introduced several innovative products and services, such as SPVs, rolling funds, and Stack. SPVs are investment vehicles that allow interested investors to raise money through quarterly subscriptions. Rolling funds enable continuous fundraising through a subscription-based model. Stack, on the other hand, offers a suite of tools to help founders start, operate, and maintain ownership over their companies.

AngelList’s decision to acquire Nova instead of creating its own private equity-focused product reflects a common strategy in the industry. Acquiring an established company with a proven track record and existing customer base provides a faster route to market. Additionally, Nova’s investor management software brings added complexity and expertise to AngelList’s offerings. While AngelList already had its own Treasury product, Nova’s solution proved to be more robust and aligned with the company’s goals.

The acquisition of Nova and AngelList’s expansion into private equity position the company for further growth and market consolidation. As the startup ecosystem continues to evolve, AngelList aims to be at the forefront of innovation and serve as a trusted partner for venture firms and private equity funds. While no immediate plans for additional acquisitions have been announced, AngelList remains open to exploring opportunities that align with its long-term vision.

AngelList’s acquisition of Nova marks a significant milestone in the company’s journey to become a comprehensive platform for the startup economy. By expanding into private equity, AngelList aims to provide startups with the necessary infrastructure and support throughout their entire lifecycle. The integration of Nova’s investor management software into AngelList’s suite of products will enhance the company’s presence in the private markets industry and fuel its growth in serving institutional funds. With a focus on innovation and market consolidation, AngelList is poised to shape the future of the startup ecosystem.

First reported on TechCrunch

Frequently Asked Questions

1. What is AngelList, and what is its role in the startup ecosystem?

AngelList is a prominent organization in the startup ecosystem that initially started as a mailing list for high-quality angel investors in 2010. Over the years, it has evolved into one of the most powerful fundraising channels for early-stage startups. Today, AngelList focuses on building the infrastructure that powers the startup economy and provides innovative products and services for venture firms, investors, startups, and fund managers.

2. Why is AngelList expanding into the private equity space?

AngelList’s expansion into private equity is a strategic move aimed at supporting startups throughout their entire lifecycle. As startups mature, their capital providers often expand beyond venture funds into private equity and eventually the public markets. By broadening its scope to include private equity, AngelList aims to offer comprehensive solutions and support for startups as they progress through different stages of growth.

3. What recent acquisition did AngelList make to enter the private equity market?

AngelList recently acquired Nova, a fintech startup specializing in investor management software for institutional private funds. Nova’s expertise and established customer base make it a valuable addition to AngelList’s portfolio of products. Nova will continue to operate as a business unit within AngelList, and its products will be integrated into AngelList’s suite of offerings, further expanding the company’s range of services.

4. How has AngelList performed in recent years, and how does it generate revenue?

AngelList has experienced significant growth, with assets supported for investors on the platform increasing by 50% to $15 billion in 2022. The number of startups funded on the platform also grew by 21% to 8,300. While specific revenue figures were not disclosed, AngelList generates revenue through various sources, including subscription and SaaS fees, as well as carried interest.

5. What other products and services has AngelList introduced in the startup ecosystem?

In addition to its private equity expansion, AngelList has introduced several innovative products and services, such as SPVs (Special Purpose Vehicles), rolling funds, and Stack. SPVs are investment vehicles that allow interested investors to raise money through quarterly subscriptions, while rolling funds enable continuous fundraising through a subscription-based model. Stack offers a suite of tools to help founders start, operate, and maintain ownership over their companies.

6. Why did AngelList choose to acquire Nova instead of developing its own private equity-focused product?

Acquiring Nova, an established fintech startup with a proven track record and existing customer base, provided AngelList with a faster route to enter the private equity market. Nova’s investor management software brought added complexity and expertise to AngelList’s offerings, complementing the company’s long-term vision.

7. Does AngelList plan to make more acquisitions in the future?

While no immediate plans for additional acquisitions have been announced, AngelList remains open to exploring opportunities that align with its long-term vision. The company aims to continue its growth and market consolidation as it shapes the future of the startup ecosystem.

Featured Image Credit: Unsplash

John Boitnott

John Boitnott is a news anchor at ReadWrite. Boitnott has worked at TV News Anchor, print, radio and Internet companies for 25 years. He’s an advisor at StartupGrind and has written for BusinessInsider, Fortune, NBC, Fast Company, Inc., Entrepreneur and Venturebeat. You can see his latest work on his blog, John Boitnott