Overview: Describing Rolling Funds, why they're worth considering for people getting started with startup investing, and listing out some interesting ones. This is not investment advice.
I'm a fan of Angel List Rolling funds for several reasons:
- The quantity and quality of startups they provide you investment exposure to. Investing in just one Rolling Fund gets you access to a volume of quality deals you would not be in unless you personally know all those same founders, which you probably don't. If you invest into several different Angel Funds, you have better exposure to startups than what you have access to. (If you think you have better direct access to startups than the best-in-class Rolling Funds, you should start a Rolling Fund 😉 and shoot me a DM).
- Accessible. They are accessible by everyday investors, letting you put relatively small amounts of money in.
- Nimble. Compared to typical venture capital funds, Rolling Funds tend to be smaller overall funds writing smaller checks into newer startups. This means getting in at the ground floor of potentially huge outcomes.
- Interesting fund leaders → interesting startups. Since Rolling Funds are relatively easy to setup, you get some interesting people running them. The people spinning up Rolling Funds are not just your typical professional investors, they're also founders/operators/creators/celebs etc. who spin up a Rolling Fund. These people often have interesting networks and friend groups for unique deal flow into interesting startups.
- Learning opportunity. As a startup founder myself, it's really interesting to read the quarterly reports for business updates across dozens of businesses each quarter. More often than not, it sparks ideas for my business, or connections to make, etc.
How do Rolling Funds work?
It starts with the main investor(s) — called the General Partner (GP's). GP's get their money from Limited Partner (LP's) who invest into the fund. GP's then invest that money into startups, then if/when the companies do well the GP's return that upside to the LP's. As commission the GP's keep some %age of that upside. Keeping 20% of upside and 2% of the overall money under management is a typical commission.
This is the basic structure for how venture capital (VC) funds typically work.
The innovation with Rolling Funds is that they allow for a large number of small contributor LP's. Whereas a typical VC fund has a large overall fund size and large LP's with tens of millions of dollars and up, Rolling Funds allow for much smaller LP's (typical contribution is $5-10k/quarter).
I recommend investing into a Rolling Fund to anyone who wants to get investment exposure to startups. I personally am an LP in several, and have shared a list of ones I'm invested in or interested in below.
If you're more interested in directly investing into startups, possibly to break into VC but not necessarily, then consider starting your own Rolling Fund and being a GP.
Overview From Angel List
More info on how Rolling Funds really work:
Introducing Rolling Funds
List of all Angel List Rolling Funds: