Ambiguities around the new regulations for crowdfunding and general solicitation for startups aren’t preventing Joshua Baer, founder of the Capital Factory in Austin, from starting his own syndicate on AngelList, the top website for young companies seeking early investment.
“This fits right between angels and VC firms,” he says. “We’re living in a time of innovation and more and more companies and more and more ideas and more and more opportunities are emerging and not everything fits into the traditional funding mode.”
His plan is to build up a syndicate of between five and 10 investors with $200,000 who will invest in five to 10 startups that focus on opportunities in e-mail, a space where Baer has found success since 1996 when he launched his first startup, Skylist, out of his dorm room at Carnegie-Mellon University.
“I have pretty good sense of what can be successful; it’s what I know,” he says. “I really believe in e-mail. Its the original killer app of the Internet.”
Others are making similar moves. Earlier this week, the Foundry Group in Boulder announced it would invest $2.5 million over the next 15 months in companies raising money on AngelList. As my colleague Michael Davidson reported on Tuesday, the project is called FG Angels, and its goal is to make 50 such investments in by the end of 2014. Foundry Group will put in $50,000 in each investment, and is looking for syndicate partners.
For Baer, this isn’t the first time he’s jumped in headfirst when he sees opportunity because of a legal change. He launched his second startup, UnsubCentral, right after a federal law passed that limited e-mail marketing and stop spam in 2004. Skylist, which operated e-mail lists such as Microsoft, Sony, and NASCAR, and UnsubCentral were eventually acquired by Pulse Point.
Baer’s third startup, OtherInbox, which he launched at TechCrunch50 in 2008, helps users manage their e-mail better. While there has been a bit of hand wringing recently whether e-mail is a productivity killer, Baer still believes in its importance. “It’s the reason we use the Internet, why people are on their phones,” he says.
Since Texas has a smaller cohort of venture capitalists investing in its startups, Baer feels AngelList syndicates can help fill the funding gap.
“A bunch of people watch what I invest in and invest with me,” he says. “Now I can basically be my own little VC with my own fund and set it up in 10 minutes. The new rules eliminated all of the overhead and fees that slow it down.”
