Photo: Courtesy of AngelList
AngelList is debuting Transfers, a new service to facilitate secondary stock sales for more mature startups.
Why it matters: Shareholder liquidity continues to be a challenge for startups as companies remain private for many years.
Details: As with its other services, AngelList provides software and all the legal management on the back end to the startup.
- AngelList also packages all of the new shareholders into one single entity on the cap table to avoid making it messier.
- Startups can set these up to be recurring as well, if they want to do regular liquidity events for early shareholders — every 12 or 18 months, for example.
- AngelList generates revenue by charging the companies for executing transactions.
Between the lines: "What started to happen was that some of these late-stage companies wanted the [VC fund] managers on our platform involved with their company but they weren't investors already," Avlok Kohli, CEO of AngelList's venture-focused business, tells Axios of the new service's origin.
- While AngelList can help find some additional buyers to fill out a transaction if the startups want, it doesn't see itself as a marketplace for startup stock. AngelList intends that customers for this service already have buyers in mind.