Although unrealized returns often go down over time, these
numbers indicate that early-stage startups should be a part of
every investor's diversified portfolio. But it has historically
been difficult to build a portfolio of
startups. Until now. AngelList Funds provide access
to hundreds of startup investments with one investment.
Internal Rate of Return is an industry-standard measure of investment
returns. If you made deposits in a bank account with an interest rate equal to the IRR,
and you made the deposits at the same time these investments were made, your balance
would equal the returns on these investments.
The IRR published here is
IRR, meaning it is after all fees and carry. It is unaudited. And it is also an
IRR, meaning the returns are based on an estimate of each investment's
value. Since venture capital returns can take 5-10 years to realize, it is an
industry standard to compare unrealized IRRs in the interim.
This unrealized IRR also doesn't reflect our estimate of the final realized IRR.
Early stage companies are valued with the waterfall method.
Later-stage companies are valued with comparable company analysis.
These are both industry-standard methods.
For early-stage companies, valuations are marked up or down to a company's latest round that was
led by a new investor. Companies that have not received investments by a
new investor since the last mark are held at the last mark or cost.
Investments may also be marked down at our discretion. This is an industry-standard methodology.
For later-stage companies, investments are
sent to a third-party for valuation if the company is valued over $100M,
the investment is estimated to be worth over $10M and 24 months have
passed since the last investment.
Valuations are calculated as of Dec 31, 2015.
Which investments are included?
The IRR includes all syndicate investments in 2013. Follow-ons are only
included if they were closed in 2013. Three incubator funds that invested
in 2013 are not included because they also made investments in 2014.
AngelList's own fundraise on AngelList is also excluded.
What is top quartile?
A top quartile fund is in the top 25% of venture capital and private
equity funds tracked by Cambridge Associates. For example, a 2013 top
quartile fund is in the top 25% of VC and PE funds that started investing
in 2013. As of Dec 31, 2015, Cambridge Associates tracked 145 funds that started in 2013, so
a top quartile fund must be in the top 36 funds.
Syndicate returns are not directly comparable to the quartile data.
First, the quartile data includes VC and PE funds across all stages,
usually investing much more capital than 2013 syndicates.
Second, these funds also make investments in 2014 and later years, while
the syndicate returns only include investments from 2013.
When will returns be realized?
It takes 5-10 years to realize a significant portion of the returns,
if there are any.
Are these returns net of fees and carry?
Yes. These investments do not charge a management fee. There is only a
fee to cover costs—typically $8K per investment. Any carry charged by syndicate
leads and AngelList is also deducted.
Does the IRR account for liquidation preferences?
This IRR does not account for liquidation preferences for companies that
are currently early-stage. This is reasonably accurate for early-stage
companies due to the
nature of returns.
For companies valued over $100M, where the investment
is estimated to be worth over $10M, we use a third-party for a valuation
that accounts for liquidation preferences and other factors. This is an
Past performance is not indicative of future returns.
There is no guarantee that any Fund will achieve the same exposure to
or quality of portfolio companies held by any existing AngelList funds.
An investment in venture funds, including the AngelList Funds, involves a high
degree of risk and is suitable only for sophisticated and qualified accredited
investors. Please request and review the formal offering documents of the Fund
for full details regarding risks, minimum investment, fees, and expenses.
Terms described above may be modified in the sole discretion of AngelList
Advisors, LLC, the investment advisor of AngelList Funds.