AngelList SPVs: The Good, the Bad and the Ugly

I set up an SPV with AngelList a couple of months ago to bring friends into an investment opportunity. I’ve never used AngelList (AL) to form an SPV, but after looking at Carta (contact us for pricing? ew.) and Assure (wound up being more expensive than AL), I took the leap.

The Good

Formation and collection of funds was a breeze with AL. I found their online help valuable for a first-timer such as myself. Creation was turnkey, and the most time-consuming part was creating the deal memo and risk disclosures (a feature, not a bug IMO). From the LP side, things were easy too: quick to go from deal acceptance to accreditation to money transfers with a support e-mail for questions. AL made this entire process seamless.

The Bad

Things started floundering at closing, though. Except for the initial formation, where a helpful rep double checks key deal details, the entire process to closing is seemingly automated, but not after closing. Once I closed the deal, nothing happened. For days. I eventually reached out to the leads support channel; perhaps I needed to get the ball rolling?

They responded a day or two later and got things started, confirming the raise specifics, carry schedule and signature block. I connected AL to my investment’s CEO, and everything was running well again! Papers shuffled to-and-fro, confirmations were sent, and AL proclaimed the deal complete.

The Ugly

But they forgot the pro-rata side letter! I responded to the AL leads support immediately after noticing this; the wire was scheduled to be sent the following day! The CEO for my investment picked up on this too and quickly put together the side letter and sent it off to AL for signature. AL executed the letter, and the rest closed as planned. Everything worked out at the end, so no harm, no foul?

The Takeaway

Online help documentation pre-closing was quite clear; however, there’s a shortage of information available for closing and beyond, leaving me guessing around what is supposed to happen. It would be helpful if AL puts out a “what to expect while closing” article detailing what leads and AL need to do.

However, missing out on the pro-rata side letter as part of the deal closing made me lose trust in AL. From my perspective, there are two key documents here: the SAFE agreement and the pro-rata side letter. If startup investment is AL’s bread-and-butter, how could they lose track of one of the two critical documents here!

No harm, no foul, right? Sure. The onus is always on me as an investor or GP to ensure that everything is in order. I followed through on that responsibility here, and there wasn’t an issue, but a miss so seemingly basic by AL has dinged my trust in them. It’s not so large that I’d consider leaving the platform for future deals, but I’m warier of the brand, whatever that brings with it.