His Brand Burnished, Naval Ravikant Plans New Fund with Babak Nivi


Since AngelList emerged on the scene eight months ago, 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 Journal even speculated that beyond giving the pair 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.

Yesterday, Ravikant told me that his ambitions are unsurprisingly more substantial than selling “$10 PDFs” that they also “give away liberally.” Indeed, three years after Ravikant raised a $20 million, social media-focused fund from investors 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.

No doubt they will throw plenty.

Through his work with AngelList and as an investor, Ravikant has become highly regarded by the innumerable entrepreneurs and investors around the country with whom he has deep ties. 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, also 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 a dot-com company he’d helped to build, Epinions.

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. (Subscribers to Venture Capital Journal can read about the settlement here.)

At the time the suit surfaced, in 2005, Ravikant was also a partner 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 me at the time. Another person close to the situation told me at the time:“[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.” (VCJ subscribers can read the full story here.)

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

In fact, before launching the AngelList matchmaking service, Ravikant and Nivi launched VentureHacks, a popular blog designed to provide entrepreneurs a roadmap to the venture industry. Though traffic has fallen since the pair launched AngelList, 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,” says Ravikant.

Right now, its hard for anything to compete with AngelList, which has been called “an entrepreneur’s best friend,” among many 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 all the while. For example, next week, the site will begin 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.”

And how.