We decided to start 1000 Angels in October of 2015 largely due to the huge gap (and opportunity) in the market while operating Onevest (the name of our previous company, and now the holding company of 1000 Angels and CoFoundersLab). We realized that the only way a high profile investor can access high quality startups was through fund managers. This seemed to be a big problem. Investing through a fund also comes with paying a 2% management fee and 20% in carried interest. These are fees that eat into your potential returns.
Take the graph below as an example. If you were to be investing $500K on a VC fund that invests $100mm in 10 companies and returns $200mm after all the exits you will be incurring a total of $100K in management fees and $100K in carried interests.
Another issue is also the portfolio exits for institutional investors. Institutional Investors will get back their returns before the company gives back the returns of their LPs. Some do it as exits come other do it all at the end. It all depends on the structure of the investment vehicle.
Considering all of the facts outlined above, it seemed to be a no-brainer to start 1000 Angels and to provide full access to investors with just an annual flat fee involved. This ensures the investor gets to keep all their returns. Another slide explaining what differentiates 1000 Angels from the existing institutional players can be seen below.
1000 Angels is a community driven network of investors. The staff of 1000 Angels travels the world to connect our members with founders who have the vision and capability in addition to a team that is capable of building a high-growth, scalable business.
Since we do not charge startups to pitch to our members, we are proud to have some of the most sought after investment opportunities. Our startups have rounds of financing that have been already been established and lead by top venture funds such as Valar Ventures (Peter Thiel of PayPal), Founder Collective, Greycroft, and other top tier VC firms.
In addition to our sophisticated online platform which can be seen on on the link below, we've launched chapters all over the US to foster relationships offline between our members and to embrace trust which is one of the most important components in our space. On some of these events we have our members meet one another and also attend the pitches from some of the companies that are listed on the platform.