Why this startup CEO decided to keep his day job but become a VC by launching one of the first rolling funds created with AngelList’s new platform

Sahil Lavingia

Gumroad CEO and early Pinterest employee Sahil Lavingia will announce details of his new VC fund next week.
Lavingia is creating a “rolling fund,” a new type of fund operated by AngelList that allows investors to pay up on a quarterly basis and cancel if they’re dissatisfied.
Lavingia said he was drawn to the rolling fund model because it requires little effort, allowing him to keep his CEO job while operating a fund on the side.
Rolling funds were introduced by AngelList earlier this year to allow new VCs to depart from the fundraising methods of traditonal venture firms that raise large amounts from fund investors over an extended time period.
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Sahil Lavingia never considered getting into venture capital until AngelList introduced its new “rolling fund” model earlier this year. As the CEO of e-commerce site Gumroad, he never had time.

“I’m sort of gainfully employed,” Lavingia told Business Insider. “So that was just never on the table for me. I’d really never considered being a VC for that purpose.”

But Lavingia was intrigued by the rolling fund model, which allows investors to “subscribe” to a fund, paying relatively low amounts into it on a quarterly basis. New investors can start a subscription at any time. That’s different from the fundraising path for traditional venture firms, which often take long periods of time to raise large sums from their investors, who are called limited partners.

Lavingia wouldn’t need the substantial operational infrastructure of a big VC firm. For a fee from his rolling fund, AngelList would handle all the legal and regulatory busywork for him. All he had to do was let them know who was investing.

Now he’s the latest tech figure to create their own rolling fund. Earlier in July news leaked that former Facebook employee Dave Morin was starting his own fund, Offline Ventures.

Lavingia said his fund will wrap up its investment period this Saturday and he will announce further details next week, including how much it raised and how much he plans to invest per startup.

The startup CEO said he won’t have strict rules about what he invests in, but he wants it to be a mix of his own esoteric personal interests and physical products that make the world better.

“When I look at my phone, there’s been so much innovation in the last forty years,” Lavingia said. “It’s like this crazy window. But when I look out my actual window, it looks the same as it probably did a bunch of years ago, which I think is kind of strange.”

People are drawn to the rolling fund model for various reasons. For Lavingia, it’s convenience. But the end result is an alternative to the way traditional venture firms raise and announce large new funds every few years.

“VC’s say they like disruption,” Lavingia said. “But we’ll see how much they like disruption when they’re the ones getting disrupted.”

The limited partners in traditional venture funds commit to making periodic payments into the fund for …read more

Source:: Business Insider


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