But early interest from emerging fund managers indicates that rolling funds might be more of the future of the company, according to AngelList CEO Avlok Kohli. “Rolling funds are what venture fund structures would look like if they were built in the age of software,” Kohli told TechCrunch.
However, unlike a traditional SaaS company, AngelList is an LP in a number of rolling funds and makes money the same way a traditional venture fund does.
Despite rolling funds getting momentum, the structure isn’t competing with traditional Series A or Series B firms just yet. “We view that rolling funds are going to be a very big part of the venture, and will be side by side with traditional funds,” Kohli said. “In the early stages, pre-seed and seed, you’re going to see a lot of rolling funds. In addition, AngelList. com is rebranding to include solely AngelList Venture and rolling funds.
When AngelList first launched rolling funds, an investment vehicle that raises money through a quarterly subscription from interested investors, the company looked at it as a bet.
That dynamic throws into question if rolling funds are somewhat limited to only helping an emerging generation of fund managers who are already well-networked and well-resourced.
Because AngelList views transparency as a core tenet, it makes sense that the first rolling funds have been created by a generation of operators and founders who build in public.
After all, the very idea of a quarterly subscription means that a fund manager has enough charisma, resources and returns to convince LPs to invest consistently. “We see rolling fund managers whether they have an audience or not,” Kohli said. “And they are successful whether or not they have a pre-existing audience or not.
The way that AngelList is externally approaching rolling funds is similar to how it approaches angel investing and syndicates: it wraps things up in a pretty bow and gives people a place to talk about and access deals.
Before you understand rolling funds, you need a high-level understanding of traditional venture capital funds.
AngelList declined to share the number of rolling funds it has anchored through a direct investment.
Rolling funds allow public builders to share their ups, downs and LP openings in a way that traditional funds wouldn’t legally allow.