At Arena Ventures we’re taking a unique approach to venture capital: we’re enabling the rest of the world to invest with us. Whereas most venture firms exist only to benefit their institutional and family office investors, Arena has a broader mission to activate a new wave of individual angel investors who can get directly involved in our deals.
Each time Arena Ventures invests in a startup we share part of our allocation in the deal with our Arena Ventures Syndicate on the crowdfunding site AngelList. What this means is any accredited investor nationally or internationally (currently $200k income for last 2 years or $1M in assets, per SEC rules) can follow our lead into deals. From engineers in Silicon Valley like Akash Garg and Ding Zhou to professionals in London and Singapore like Jihan Bowes Little and Lhoucine Aderdor, a wide range of backers are already in the syndicate. In the next 5 years, we’re going to help 10,000 more invest with us.
The first spark behind Arena Ventures happened three years ago when Jeff Lo and I found ourselves as strangers in Las Vegas comparing Jeff’s backing of poker players to my method of evaluating startup founders. Our friendship quickly developed into a professional relationship of sharing deals, co-investing (often as the first investors in a startup), and constantly learning from each other. We weren’t formally “in business” together yet, but we spent the last three years collaborating as angels. Together we’ve seen thousands of pitches, made thousands of helpful contacts, and earned exceptional returns through a number of big wins. But as individual angels we also saw a challenge - and through it an opportunity.
We’re in the midst of an Industrial Revolution-scale shift in the economy brought by new technologies and business models, and there are few activities more exciting or potentially lucrative than being an investor at the center of it. But much of the financial returns from this revolution are going back to the multibillion-dollar funds and family offices that back traditional venture capital firms. Although everyone has the opportunity to invest in companies on the public stock market, only a few have been able to invest in privately held tech companies where the hottest growth is.
When Jeff and I decided to create the firm last year, we saw the opportunity to change that by incorporating crowdfunding. Unlike traditional venture firms that only raise large 10-year funds from endowments, pension funds, and large family offices, Arena includes capital from individual people into each deal - with checks as small as $1,000. The rapid growth of crowdfunding platforms is empowering the millions of people who qualify with access to high-risk, high-reward investment opportunities that they’ve been excluded from in the past.
Finding, recognizing, and accessing the top startup investments still requires extensive time and expertise though. Jeff and I won access to the best deals because because we committed far more time, travel, and resources toward startup investing than most people can afford. As hundreds of millions of dollars flow through sites like AngelList, there’s a need to help non-professional investors identify which companies are worth investing in.
To create that solution, Naval Ravikant and the AngelList team pioneered “syndicates” in 2013 that allow people to back experienced investors who are curating opportunities for them. I jumped on board right away to syndicate a few of my angel investments, joining guys like Tim Ferriss and Jason Calacanis who have been spearheading the model. Gradually a few venture firms have even dipped their toes in by syndicating small deals into companies too small or not fit for their actual fund (Brad Feld and the Foundry Group have led the way). We launched the Arena Ventures Syndicate earlier this year as the first syndicate fully supported by the manpower of a full-scale venture capital firm (with 6 full-time investors) sharing every one of its early stage deals.
A syndicate investing in partnership with an actual VC firm stands out because a VC firm can lead highly competitive deals that are almost never open to crowdfunding otherwise, and because it maximizes the benefit to entrepreneurs. We maintain large cash reserves and a full-time team so we can continue to invest in and support these teams as they scale. Our hybrid model means the startups get both the full value of an established VC firm leading their round plus the ability to tap into an additional network of supporters from AngelList who can test and promote their product, refer potential hires and make key introductions.
Crowdfunding is still in the early adopter phase of its journey, but it’s exploding and will increasingly disrupt the way startups raise funding. Arena Ventures is at the center of that shift as the first venture firm including all types of investors and providing the best of both fundraising options to entrepreneurs. As crowdfunding scales and the number of investment opportunities on platforms increases dramatically, our ability to cut through the noise and curate the best startups for our AngelList backers will ensure more people feel comfortable participating and take part in top deals.
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