The current system involves syndicate leads raising money on a deal-by-deal basis. I think that’s likely to stick around for a while. But I see rolling funds as the future of the platform.
The current syndicate model is slow and clunky. It usually takes weeks to set up a deal and sometimes a month or more to close it. With a rolling fund, the money is ready to be invested as soon as it’s raised. It’s essentially the SaaS (software as a service) version of venture capital — it’s more flexible and requires less up front commitment from investors. The rolling fund manager can also move a lot quicker and get into more deals. The main drawback is that we’ll likely get less information about the companies we invest in. It will be more of a trust-based system.
So what does this mean for online angel investors like us? I suspect we should all be looking for potential rolling funds to join. I think it’s likely that many of the top investors on AngelList will be moving primarily to this format.
I recommend that you start looking at syndicate leads who you’d trust to run a rolling fund. Examine their track record and look at their deals. Invest in a few. Then inquire with the leads you like about whether they are raising a rolling fund.
I think that rolling funds are the future of AngelList — possibly the entire VC industry. So I’m starting to get more familiar with them. And I’ll be evaluating potential funds to join.