From intro to investment
Each deal is its own decision. The same network that pressure-tests a thesis is the network that allocates capital to it. Here is how a typical deal moves.
- 1
A founder applies
Through the website, an intro from someone we know, or a referral. We read every application within two weeks.
- 2
We talk, and pull in the right experts
If there is a fit, we route the company to experts whose recent work overlaps with what is being built. Their job is to tell us what they like about the opportunity, and what worries them.
- 3
We look for three signals
Conviction tends to show up in three places: a team that can execute, commercial traction or technology that is hard to copy, and respected operators or co-investors who want in. When the signals are there, we move.
- 4
We open allocation
When we get conviction, the deal goes out to the community. Each investor decides per deal.
- 5
We close and stay engaged
After the round closes, the same experts who said yes stay involved. Hiring intros, customer intros, partnership intros come from the network the founder met during diligence.
How the round comes together
We structure each investment as a special purpose vehicle (SPV) on AngelList. Each SPV holds up to 250 investors with a $1,000 minimum check size, and shows up as a single line on the company’s cap table.
The process is built to move quickly. Once we decide to socialize a deal with the RBV community, we send an email to the network – tens of thousands of people – with high-level public information about the company and why we are excited about the opportunity. The same email invites the community to RSVP for a 60-minute webinar with the founder, typically held Fridays at noon ET. After the webinar, we send the recording and the investment link to the full community, along with a wire deadline, typically two weeks from the webinar.
One important condition: even after the SPV is fully funded and closed on AngelList, we do not release the wire to the company until at least 75% of the target round has been raised. This protects everyone in the SPV, and it is non-negotiable.
Each investment is structured as a private placement under U.S. securities law and is open only to verified accredited investors. AngelList verifies accreditation status before allocation.
How the economics work
Red Bear Ventures does not charge founders or experts to be on the platform.
Investors in each deal pay a one-time fee to RBV (5% of committed capital) plus their pro-rata share of a $10,000 SPV administration fee to AngelList. Both fees are funded out of the round – deducted from investors’ committed capital before AngelList wires the net proceeds to the company. In addition, if investors profit from an investment, RBV charges investors 20% carried interest on that profit.
This compares favorably to most venture funds, which charge investors “2 and 20” – a 2% annual management fee over a ten-year fund life, which compounds to roughly 20% of committed capital against RBV’s one-time 5%, plus the same 20% carried interest. In other words, with RBV, roughly 95% of an investment goes directly into the company (the exact amount varies depending on the individual investor’s pro-rata share of the $10,000 SPV fee charged by AngelList) versus 80% with most venture funds.
Compensation for experts
Experts can make money on the platform in three ways. If an expert invests, RBV waives its carried interest on the expert’s investment. If an expert joins a company’s board of directors or advisory board, the company typically compensates the expert with cash and/or options. If an expert agrees to share feedback with the RBV community, they receive a portion of RBV’s carried interest (exact % varies by investment).
For more on the risks and mechanics of early-stage investing, see our Guide to Early-Stage Investing.
Ready to put this in motion?
The fastest way to engage with us is to apply. Whatever role fits.