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Published: Sunday, 3/20/2011

Web site matches tech start-ups with hopeful investors


SAN FRANCISCO -- For Naval Ravikant, the problem with investing in start-ups boils down to coffee.

"I thought … there has got to be a better, more efficient way to evaluate them than to do thousands of coffee meetings," Mr. Ravikant, 37, a technology entrepreneur turned investor.

So in February, 2009, he and Babak Nivi, a fellow investor and start-up mentor, started AngelList, a networking Web site that substitutes endless pitch meetings with Internet-based matchmaking.

More than 1,300 investors, including about 400 venture capitalists, have joined the site. The other 900 are angel investors, who put up their own money for a stake in a company.

On average, more than 20 start-ups from all over the world join the site every day, and about 200 companies have been financed. Mr. Ravikant and Mr. Nivi vet the investors before they are allowed on the site, which is free for both investors and startups to join and has become hotter in Silicon Valley than many popular start-ups.

The site combines deal-making with social network profiles to make it "one of the most innovative things that has happened in venture capital in the last five years," said Dave McClure, an angel investor and founding partner of 500 Startups, a Silicon Valley technology incubator.

He is one of the most active investors on AngelList's site, writing checks for up to $250,000 to dozens of start-ups, including $100,000 recently to forrst.com, an online community for Web designers.

Not everyone shares his enthusiasm. Some Silicon Valley venture capitalists have voiced concern that AngelList adds more fuel to an already overheated start-up market. Among detractors is Bryce Roberts, co-founder of O'Reilly AlphaTech Ventures and an investor in Foursquare. He recently wrote a blog post detailing why he had deleted his AngelList account, saying the site created an environment where "angels feel compelled to invest for fear of missing the boat everyone else is getting on."

In recent weeks, AngelList experienced its biggest investor frenzy yet, over a company called Green Goose, which makes tiny motion-sensing stickers that attach to everyday objects such as a running shoe or a pill bottle and upload real-time data when that object is used.

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