The development of the AngelList online syndication model in equity crowdfunding and its effects on venture capitalism and the seed funding industry

Abstract

AngelList developed online syndication to enable lead investors to collect backing investments from other individuals and professional investors. Online syndication, as part of equity crowdfunding, was expected to answer some fundamental issues of seed funding and possibly contribute to the disruption of the crowdfunding industry. However, we observed that there is a shift in the platform's strategy towards institutional investors and that the platforms that was once believed to embody the future of equity crowdfunding follows another direction to go away from crowdfunding. It is becoming a back-office platform for traditional investors and focuses on new markets, outside of funding. We argue that AngelList is going beyond a new form of equity crowdfunding to develop a digital solution that will bring online a wider concept and aims at becoming the startup platform, across all its non-core needs. However, this will require AngelList to cross-boundaries, and the Boston case example shows that the platform is not there yet from the geographical point of view.