Back in February, AngelList introduced a new feature called “rolling funds.” It’s a new type of fund that invests in startups.
To understand what’s unique about rolling funds, we first need to know how traditional venture funds work. Traditional funds typically raise a large amount of money upfront — anywhere from $5 million to $1 billion. The fund manager then invests that money over the next 2-to-4 years and manages it for a total of around 10 years. Individual investors have very little control over how their money is used in the fund.
With AngelList’s rolling funds, the manager doesn’t need to raise the whole fund upfront. Instead, investors have the ability to invest in the fund quarterly. And they don’t have to invest every quarter. Investors have the freedom to stop investing if they don’t like what the fund is doing — or to increase their investment if it’s performing well.
You can read AngelList’s latest update on rolling funds here. If you already back syndicates on AngelList, you may have received an invitation to invest in a rolling fund. If you haven’t yet been invited, keep an eye on your inbox. AngelList will soon be publishing more information for investors about this new option.
There’s also a good article from TechCrunch which goes into more detail here.
Rolling funds may not sound like a big deal at first. But I think they could change the way that we invest in startups. With quarterly minimums starting at just $5,000, this could be an excellent way to diversify your startup portfolio.