FG Angel FAQ

We’ve been floored by the amount of interest the community has shown in our AngelList syndicate, FG Angel. Alongside that interest has come a lot of questions which have been helpful to us as we work through the details of creating our AngelList Syndicate and making our first FG Angel investment.

To provide clarity where we can, we’ve put together this FAQ that responds to many of the questions we’ve received. As you read through this FAQ, keep in mind that it is specific to our FG Angel initiative. If you have questions about syndicates in general, AngelList has put together their own FAQ.

If you want to jump into the fray and you can join the FG Angel syndicate here. We are capping it at $500,000 ($50,000 from us and $450,000 from the syndicate.)

The answers below are not static, and we expect there will be new questions. As AngelList evolves, so will we.

Investment Parameters

Do you intended to use Foundry Group themes as a guide or will you be more promiscuous? We see FG Angel as a great way to explore new areas that we’re interested in, but haven’t dug into yet due to Foundry Group’s thematic investing. We’ll also be investing in companies that fall within Foundry Group’s themes. In short, promiscuous.

Will you lead deals? Look for ones that already have terms set? Both? Both. Our focus is on companies and founders that we see potential in; we’re comfortable either leading or following.

Is there a ceiling on valuation or dollar amount raising? No.

Are there AngelList specific dynamics which make an investment more/less attractive? We have no clue! That’s one of the reasons why we started FG Angel: to learn how this new channel of investing changes investing itself.

Will FG Angel investments be first round only? Given the amount of capital that we are putting into the companies (capped at $500k), it makes sense that we’re the first money in, or close to the first money in.

Investment Process

How will the FG Angel investment process differ from traditional Foundry Group process? One big difference: not all the decisions need to be made over sushi because that would be a lot of raw fish. Our FG Angel investment process is a lightweight version of our typical process. All four partners have to be really interested in the company. We’ll run an internal diligence process before we make a decision to invest.

Will you meet with companies in person? Video? Either in person or via video conference. Or both.

Do you need unanimous partner support in to invest in a company? Yes.

Will you send companies to AngelList to invest in them there? If we are interested in the company and they are at a stage that makes sense for FG Angel to invest, yes.

Will Foundry Group invest alongside FG Angel? Perhaps. Foundry Group is by no means a follow on fund to FG Angel. However, if there is a company that FG Angel has invested in that fits within Foundry Group’s themes we’ll definitely consider it.

Deal Parameters

Will deal structure / term sheets differ from traditional Foundry Group investments? If so, how? We will be using AngelList’s standard documents.

While you won’t take a board seat, will you be a part of selecting a board representative? No.

Will you negotiate terms? Unlikely. We won’t accept terms that are outrageous, and if it comes to that point, we won’t be investing in the company.

Are there any follow on dynamics in the AngelList syndicate structure? Another question that we’re very interested in ourselves. We’re hoping to learn the answer through our early participation of the syndicate experience.

Portfolio Integration

Will an FG Angel investment be treated differently than other portfolio companies? Yes. Many of the companies will be at a different stage than the other companies we invest in so we’ll start out with a few different things.

  • They will have their own communication channels (but will still be introduced to Foundry Group portfolio).
  • They will have their own page on the website.
  • They will not have a specific partner paired with them, but rather have access to all the partners on an as needed basis.

Syndicate Relations

What level of communication do you anticipate having with syndicate members? One of the greatest values we see from the syndicate structure is the amount of supporters a company gains through one (relatively small) financing. We want to maximize the value of this network the best that we can. The specific channels of communication are still being figured out but expect high levels of transparency between the syndicate members, the CEOs of the companies, and all four partners at Foundry Group.

Miscellaneous

Is there a situation where FG Angel is competitive with Foundry Group? Nope. Due to how we structured FG Angel, there is no legal or deal flow competitiveness between FG Angel and Foundry Group. It’s all part of the same investment portfolio.

Will you help companies raise the next round? If specific questions about fundraising arise, we’re available to help. However, we will not be directly involved in helping FG Angel companies raise additional capital.

Will you allocate reserves per company or to FG Angel investments collectively? FG Angel will not be holding any capital in reserve for follow on investments.

3 Comments
  • http://www.startupmanagement.org/ William Mougayar

    Despite the fact that you might be leading, you won’t be helping to raise additional capital, nor hold reserves for follow-on investments.

    So, is it accurate to interpret this as a message to the startups that they are “on their own” for the follow-ons, and need to rely on other investors or find new ones?

    • http://www.feld.com bfeld

      It’ll vary by situation. We want to set the expectation “low” and overperform.

      • http://www.startupmanagement.org/ William Mougayar

        You smart dogs :)