AngelList's Naval Ravikant goes after institutional investors with new funds

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Vicki Thompson

Naval Ravikant launched AngelList syndicates a year ago to enable individuals to put together big seed rounds for startups. Now he is putting together funds aimed at institutional investors who traditionally have invested in Silicon Valley's big venture firms.

Cromwell Schubarth

Senior Technology Reporter- Silicon Valley Business Journal

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Naval Ravikant created syndicates last year as a way for individual investors to tap the power of AngelList to back startups.

Now he is creating a way for big institutional investors to do seed investments on his network of founders and funders.

"Most of these institutions already are investing in traditional venture capital funds, but they've missed out entirely on seed, where they can get in the earliest and track a company's progress, because it hasn't scaled," Ravikant told Fortune's Dan Primack.

Ravikant says he isn't trying to compete for funds that might go to traditional venture firms on Sand Hill Road, but VCs there apparently aren't so sure.

Primack reports that when some firms approached AngelList about investing in Maiden Lane, a sort of beta version of the new institutional funding platform, they balked when Ravikant said the price of admission would be introductions to the VCs' own limited partners.

The new funds for institutional investors will reportedly do deals of around $40,000 each, investing around things like industry sectors or geography. They may also include access to stealthy startups not listed on AngelList's public site.

Sand Hill Road may have reason to be concerned about what Ravikant and AngelList are up to. In the first year of syndicates run by superangels like Tim Ferriss and Gil Penchina there were about $87 million worth of seed deals were transacted. Volume jumped 300 percent in the last nine months, giving the syndiicates a collective theoretical annual run rate of about $127 million, which would rank it among the most active venture investors in the U.S.

Cromwell Schubarth is the Senior Technology Reporter at the Silicon Valley Business Journal.