AngelList Creators Plan Venture Fund

Since AngelList emerged on the scene early this year, many have speculated how its founders, Naval Ravikant and Babak Nivi, plan to monetize the service, which vets startups for accredited investors.

In June, the Wall Street Journal noted that beyond giving Ravikant and Nivi access to companies they might personally want to fund that AngelList helps them to “indirectly market” entrepreneurial guides that the two authored some time ago.

Ravikant says his ambitions are more substantial than selling “$10 PDFs” that he and Nivi also “give away liberally.” Indeed, three years after Ravikant raised a $20 million, social media-focused fund called Hit Forge, he and Nivi are looking to raise a new fund “in the range” of $40 million next year. “We’ll see how much money people throw at me,” he says with a laugh.

Odds are Ravikant and Nivi will find a fair amount of LP interest.

Through his work with AngelList (http://angel.co) and as an investor, Ravikant has become well regarded by entrepreneurs and investors around the country. Moreover, Hit Forge invested in Foursquare and Twitter (it acquired early stakes in both), and it has already seen at least two portfolio companies sell: Mixer Labs, which raised an undisclosed amount of seed funding, including from Reid Hoffman, and was acquired for stock by Twitter late last year; and DocVerse, which raised just $1.3 million from Ravikant, Baseline Ventures and Harrison Metal Capital and sold to Google late last year for $25 million.

It’s some comeback story. In 2005, Ravikant was one of two entrepreneurs-turned-venture capitalists who joined a lawsuit against BV Capital, Benchmark Capital and August Capital, where Ravikant was once a venture partner. The suit centered on profits made from the sale of Epinions, a dot-com company he’d helped to build.

By the end of that year, Ravikant and other plaintiffs had settled the suit, but it was assumed that Ravikant had made a dangerous gamble with his reputation and connections by suing his peers.

We’ve been doing VentureHacks for three years. It wasn’t a business, but it’s built our brands.

Naval Ravikant

At the time the suit surfaced, in 2005, Ravikant was also a partner with Dot Edu Ventures, which quickly removed his name from its website, and whose founder and managing partner, Asha Jadej, played down the firm’s relationship with Ravikant. “We were at a point where we felt there were multiple factors, including the suit, which helped us all decide that this might be a good time to part ways,” Jadej told VCJ at the time. Another person close to the situation said Ravikant “had better win this suit and he better hope that he makes enough for life, because he’ll never work as a VC again.”

So much for that prediction. Not only has Ravikant been quietly investing from Hit Forge—which he says is fully committed at this point—he says he has turned down numerous offers to join venture firms in recent years, preferring to invest in and interact with entrepreneurs on his own terms.

Before launching the AngelList matchmaking service, Ravikant and Nivi started VentureHacks, a popular blog designed to provide entrepreneurs with a roadmap to the venture industry. VentureHacks’ traffic has fallen since the pair launched AngelList, but that’s mostly because “we kind of wrote everything about how to negotiate a venture financing, and you can only do that so many times—the material is already out there,” Ravikant says.

Right now, it’s hard for anything to compete with AngelList, which has been called “an entrepreneur’s best friend,” among other accolades. Ravikant, Nivi, and a newer partner in the endeavor, Brendan Banker, are “probably vetting 20 pitches per day” for investors, says Ravikant, and they’re iterating on the service. For example, last month the site began allowing entrepreneurs more control over the investors who see their pitches.

Little wonder Ravikant and Nivi—who has himself done stints at an EIR at Bessemer Venture Partners and Atlas Venture—have their sights set on doing a fund for themselves.

“We’ve been doing VentureHacks for three years,” he says. “It wasn’t a business, but it’s built our brands.” —Constance Loizos