Why you should consider using an AngelList RUV

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I recently founded OLA and closed our friends and family round through an AngelList RUV. Many founders have reached out with questions about the RUV so I wanted to share my experience.

Note that this is not sponsored and should not be considered financial nor legal advice.

Why it worked for OLA

Diversity in our investors

OLA’s mission is to enable US Hispanics and Latam consumers to grow their wealth by creating tools that allow them to invest, save, and learn (sign up for our waitlist!). Since we wanted investors who understood the problems that we are solving, we needed a diverse cap table. This meant that we had to make it easier for non-US citizens with smaller check sizes to invest.

Thank’s to the RUV, we ended up with:

• 35 Angels
• 40% female
• 82% born outside of the US
• The lowest check size was $1k
• The largest check size was $70k
• +10 countries represented

AngelList’s RUV facilitated smaller check sizes, completed KYC for non-US citizens, and managed taxes. The smaller check sizes were especially important to allow more women to invest.

Getting a new investor onboarded was as easy as setting up a link and sending it. You still need to pitch your idea and send a deck, memo, video, etc., but you remove a lot of the required paperwork.

Ease of use and Accreditation

I had never invested in startups nor fundraised, so I did not know about accreditation. For those new to this, in order for someone to invest in your company, they must be an accredited investor. Being accredited means that they fulfill at least one specific requirement regarding their income, net worth, asset size, governance status, or professional experience.

Without the RUV, the steps to onboard an investor and make sure they were accredited are the following:

1. Pitch the investor and get their buy-in
2. Send an accreditation form for them to sign and return
3. Receive the signed accreditation form
4. Send it to the lawyers to make sure it was correct
5. Lawyers approve accreditation form
6. Send the SAFE agreement
7. Receive the signed SAFE
8. Send bank account details
9. Wait to receive the funds
10. Confirm funds were received
11. Follow up on all the above steps

Not only is it time-consuming, but there are also risks involved with wire fraud.

With the RUV all you need to do is:

1. Send a link
2. Follow up with any questions

AngelList manages the rest.

Low Cost

The total cost of the RUV ended up being around $500. According to AngelList, I saved approximately $60k in lifetime tax and legal costs.

Simplified cap table

I haven’t seen the benefit of this yet, but apparently, I will be grateful for this after a priced round.

Taxes

Angelist takes care of submitting tax forms, etc so we don’t have to. They submit W8 for non-US tax residents and manage taxes with US tax residents.

Support

Angellist’s support was amazing; I had all questions answered in less than 24 hours.

Know your customer

AngelList takes care of the KYC of each investor so you can be confident in who is investing in your company.

Less risk of wire fraud

No need to send bank details back and forth and risk funds getting lost.

Great investor feedback

Investors loved the experience. One of them even sent another founder my way in order for them to use an RUV.

Why not move forward with an RUV

Too many investors to manage

Having a lower minimum check size means you have more investors and expectations that you need to manage. You should define your goals and decide if this is right for you.

Your company does not qualify for an RUV

To qualify, the company needs to be incorporated in the US, Canada, Cayman Islands, or Singapore.

LLCs, companies not incorporated in the countries mentioned above, companies in the cannabis, tobacco, real estate, oil and gas industries, and public companies do not qualify for an RUV.

ALTO IRA hack

AngelList allows angels to invest through IRAs to be tax efficient. Their IRA of choice was Alto IRA that was hacked while my RUV was open. Consequently, so were a few of my investors. No money was lost, but investors’ information was put at risk. We were never notified and had to find out through Twitter. Hopefully, this will not happen again, but there is always a risk.

One time payment

If you need the money urgently, the RUV might not be the best approach. The RUV only allows a one-time payment, so you need to make sure you have enough cash available to cover costs while the RUV is still open.

FAQs that I have been asked

For AngelList’s official guide on RUVs, please click here.

• In my opinion, you still need to pitch your investors and get their buy-in before sending the link. But people may have different strategies.
• My RUV was open for about 2 months until I reached my investment goal.
• The RUV is managed through a Dashboard that you can log into at any time. You can track who has viewed the deal, who has submitted their info for KYC, who has transferred funds, and whose funds have arrived. You can also include your deck and any relevant info.
• People can invest through ACH, wire transfers, or an IRA.
• Investors transfer funds to AngelList, who then transfer the funds to your bank account through a one-time payment.
• You can update the dates of the deal at any point in time through the dashboard.
• You may not modify terms for specific investors. Everyone who invests through the RUV has to do it under the same terms.
• You sign a SAFE with Angellist and they wire the money to you once the RUV is closed.
• You can create different investment amount links and send them to your investors. The minimum investment size is $1k.
• You can set the maximum amount allowed for an RUV investment.
• You have the ability to accept and reject investors.
• Once you pause your RUV, you may reopen it.
• Once you close the RUV, you may not reopen it.
• You cannot discuss the RUV on social media nor promote it publically when it is open.
• Non-US residents can invest in your company and AngelList takes care of the KYC on your behalf.
• Angels cannot invest with crypto, at least not yet.

If you have additional questions on the AngelList RUV email: rollups@angel.co

If you want to learn more about OLA, reach out to me: isa@siguelaola.com

If you are a founder, good luck!