Can you imagine a hotel that does not own a single piece of property? Or a taxi business with no cars in its fleet? Ten years ago it was nigh but impossible. Nowadays it is a reality. So it is possible to become the most profitable venture fund without a cent of capital? The answer is Angellist.
To explain how Angellist, supposedly, works, one should elaborate how a traditional venture fund works.
So, there are limited partners who invest and general partners or management who run the whole thing. For example, limited partners invest $500 million for 10 years. General management gets 2% management fee which is $10 million a year and 20% share of profits which is called carried interest, or carry. The fund invests all the invested capital, which is $400 million and gets 500% profit which is $2 billion. Net profit is $1.5 billion. The management gets 20% of the net profit which is $300 million and is a measure of the effectiveness of the fund.
Now, Angellist works differently. Note that the following is not official Angellist information, rather than a probable business model.
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