AM I ALLOWED TO HAVE OTHER JOBS WHILE PARTICIPATING IN SPEARHEAD?

Yes, we expect that you have a full-time position as a founder of your company. The Spearhead programming is outside of work hours, on nights and weekends. ‍‍‍

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WHAT IS SPEARHEAD?

Spearhead funds and mentors new angel investors. Twice per year, we invite a new cohort of founders to invest with Spearhead. We provide you with $200K to start making investments, with up to $1M in total funding over two years. You attend monthly dinners with top angel investors and VCs to learn the craft of venture investing. ‍‍‍‍‍‍‍‍‍‍‍‍

FAQ

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ABOUT

Frequently Asked Questions‍‍‍

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WHY SHOULD I APPLY?

Investing in early-stage startups can be extremely profitable and lets you monetize the advice you already give to other founders. Spearhead provides capital so you can make these investments, and mentorship to help make good investments. You’ll also become a better founder by working with the other world-class founders in your cohort.

WH‍‍‍O SHOULD APPLY?

Please be a founder of a technology company with access to pre-seed and seed dealflow. Founders come to you for your expertise, reputation, advice, and network.

WHAT'S THE TIME COMMITMENT?

The time commitment is about the same as picking up one independent board seat. We expect that you’ll spend several hours each week, either helping startups in your portfolio or participating in the Spearhead program.‍‍‍ We host monthly dinners in SF and expect you to attend.‍‍‍

APPLICATION‍‍‍

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W‍‍‍HEN IS THE SUBMISSION DEADLINE FOR COHORT 2?

Applications for Spearhead’s Cohort 2 close on Wednesday, October 31, 2018 at 11:59 P.M. PST.

HOW MANY PEOPLE WILL BE SELECTED?

We will accept approximately 10-15 founders for the second cohort.

IF I'M NOT SELECTED, WHEN CAN I APPLY AGAIN?

We plan to accept applications for the t‍‍‍hird cohort in Q3 2019. If you’re not selected for the second cohort, please re-apply then. See spearhead.co/apply for application dates and announcements.

DO I NEED TO BE AN ACCREDITED INVESTOR?

No. You do not need to be accredited to participate in Spearhead. If you are accredited, we will ask you to you to invest a small amount of your own capital‍‍‍.

TERMS

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HOW MUCH MONEY DOES SPEARHEAD GIVE ME TO INVEST? IS IT THE SAME FOR EVERYONE?

Each founder starts with the same amount: a first tranche of $200K from which to make roughly 4 investments. Provided that you maintain involvement with Spearhead and adhere to a handful of ground rules, you will earn access to a total of $1M over the course of the two-year program. Just as a venture firm calls capital and doesn’t have the entire fund sitting in the bank, your capital will be called in tranches.‍‍‍‍‍‍

IS THE FUN‍‍‍D REALLY MINE? WHAT ARE THE TERMS?

Yes. You control the fund and have authority over investments. You earn 15% carried interest on the fund, which means you get to keep 15% of the fund’s profit. For example, if you turn $200K into $2.5M, you earn $345K for yourself.

CAN I RAISE MONEY FROM OTHER SOURCES, LIKE FRIENDS AND FAMILY?

You’re encouraged to invite others - be it friends, family or institutions - to invest in your fund. Each must be an accredited investor. Click here to learn what an accredited investor is.‍‍‍

IS THERE AN OPPORTUNITY TO INCREASE MY FUND SIZE OVER TIME?

Each Spearhead participant begins with $200K, with the intention of investing up to $1M over the two year program. This refers to the portion allocated from Spearhead. As mentioned above, Spearhead participants are encouraged to raise capital from outside parties to augment the Spearhead allocation.

PROGRAM

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WHAT AM I AGREEING TO BY WORKING WITH SPEARHEAD?

You agree to invest in accordance with Spearhead investment guidelines (see investment guideline‍‍‍s below). You also agree to “no cherry-picking,” which means that all of your deals that fit the Spearhead criteria must be done from your fund. You cannot choose to do some deals from your fund and other deals with alternate sources of capital.

HOW OFTEN WILL SPEARHEAD HOLD EVENTS?

Spearhead hosts dinners once a month with leading angel investors and VCs such as Keith Rabois and Elad Gil.  

AM I REQUIRED TO GO TO ALL THE SPEARHEAD EVENTS?

You should join for all events where it does not impose significant hardship for you to attend. The events are intended for the group to benefit as much from one another as from the speaker.

INVESTMENT GUIDELINES

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IN WHAT TYPES OF COMPANIES SHOULD I INVEST?

Back compelling founders working on big opportunities (100X+ return potential) and maintain a heavy bias towards software and services businesses that scale efficiently. You should focus on pre-seed investments with the goal of being the “first check in‍‍‍” as often as possible. Your average pre-money valuation should be well under $10M.

HOW LONG SHOULD IT TAKE ME TO DEPLOY THE FUND?

At least 6 months for the first $200k‍‍‍. There’s no penalty for taking longer or not making investments; keep your bar very high.

HOW MUCH SHOULD I INVEST IN EACH COMPANY?

No more than $50,000 in your first deal. Please use your own judgement after that.

APPLY

HOW IS SPEARHEAD DIFFERENT FROM SCOUT PROGRAMS?

Spearhead is focused on discovering and mentoring great angel investors. Scout programs, in contrast, are focused on generating downstream dealflow for venture firms.

Spearhead is not proprietary to a single venture firm. When you join Spearhead you get a fund that you control. You are able to invite other investors (including other firms) to invest in your fund. In typical scout models, you’re investing for a single venture firm from an entity that the firm controls.

ARE THERE FEES OR OTHER COSTS I SHOULD KNOW ABOUT?

No. Participating in Spearhead is without charge. If you are accredited with sufficient liquidity, we will ask you to invest your own capital in your fund.

HOW IS ANGELLIST INVOLVED WITH SPEARHEAD?

AngelList powers the back-office for your fund. AngelList deals with all of the lawyers and accountants so you have the freedom to focus solely on investing. Naval Ravikant and Jake Zeller of AngelList are both Partners in Spearhead and actively involved in day-to-day management of the program.  

HOW IS ACCOMPLICE INVOLVED WITH SPEARHEAD?

Accomplice is the largest investor in Spearhead, alongside a handful of other investors affiliated with Accomplice. Both Jeff Fagnan and Cack Wilhelm of Accomplice are Partners in Spearhead and actively involved in day-to-day management of the program.  

IF I LIVE OUTSIDE THE UNITED STATES, WILL I BE CONSIDERED?

Unfortunately, no. Spearhead is currently limited to the United States‍‍‍.

DO I NEED INVESTMENT EXPERIENCE TO APPLY?

No, we welcome founders with no prior investing experience. Over the course of the Spearhead program we aim to equip you with the knowledge necessary for angel investing. Candidates should have access to high-quality dealflow, but are not required to have made investments. ‍‍‍

IF I'M ALREADY A SCOUT FOR A VC FIRM, CAN I STILL APPLY?

Yes. If you’re selected, we’ll ask you for details on the scout arrangement to ensure that you intend to treat both Spearhead and the other firm fairly.

Please note that you can invite outside investors, be it individuals or firms, to invest in your fund with Spearhead. Firms such as Bain Capital Ventures and Foundation Capital have already co-invested with Spearhead in individual funds.

PROCESS

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WHAT IS THE PROCESS AFTER APPLICATION SUBMISSION?

We will review your application. The best applicants will be invited to interview with Spearhead.

‍‍‍WHEN CAN I EXPECT TO HEAR ON MY CANDIDACY?

By Friday, November 2, 2018  you will hear from us regarding whether or not you have qualified for an interview.

WHEN ARE THE INTERVIEWS TAKING PLACE?

Interviews will take place November 9 in New York City‍‍‍ and November 12 in San Francisco. We will communicate further details to those invited to interview. If you can't make the interview in-person, we will schedule a video conference.

WILL I NEED TO TRAVEL FOR THE INTERVIEW?

We will be conducting interviews in San Francisco and New York City.  If you are not in one of these cities, you are expected to travel. If you are unable to travel, we will host the interview via video conference.

WHEN WILL I FIND OUT IF I'M ACCEPTED TO SPEARHEAD?

Within two weeks of your interview we will let you know whether or not you have been accepted.

WHEN WILL PROGRAMMING FOR SPEARHEAD COHORT 2 START?

January 2019.

HOW OFTEN MUST I UPDATE YOU ON THE PORTFOLIO?

Official portfolio reporting will be kept to a minimum: a brief portfolio write-up once per quarter‍‍‍. The Spearhead program is designed to be involved and collab‍‍‍orative between the founders and the extended Spearhead team; we anticipate a constant flow of information in both directions.

WILL MY SPEARHEAD INVESTMENTS BE MADE PUBLIC?

No. The Spearhead team and any other direct investors in your fund will have visibility. Additionally, the limited partners (investors) in Spearhead have access to the underlying investments. All parties are under NDA.  

WILL IT BE LISTED PUBLICLY THAT I'M PARTICIPATING IN SPEARHEAD?

Yes. If you have an extenuating circumstance, please describe in your application under “Anything else we should know?” and we will consider making an exception.

CAN I INVEST OUTSIDE OF TECHNOLOGY? HOW DO YOU DEFINE TECHNOLOGY?

No. You should only invest in technology companies. Any company where a significant portion of invested capital goes towards anything other than building and selling hardware or software is not a technology company.

Specific categories to avoid: life sciences, medical devices and biotechnologies, pure e-commerce, capital intensive businesses, pure gaming businesses, lifestyle businesses, editorial content/media, consumer packaged goods, businesses with significant platform vulnerability (e.g., virally marketed apps on FB/TWTR), heavily offline businesses, social impact or B Corps (ask first).

ARE THERE RESTRICTIONS ON THE TYPES OF INVESTMENT DOCUMENTS I CAN USE?

SAFEs, equity and convertible notes are all acceptable. Say “No” to uncapped notes. Watch out for bridge rounds.

SHOULD I NEGOTIATE FOR PRO-RATA RIGHTS?

Yes. Financially this is very important for you. If a company you invest in raises a follow-on round and looks to be doing well, you can use AngelList to get money from other investors and invest your pro-rata. You will earn additional carried interest on this amount.

Pro-rata investments can significantly improve your financial returns. The AngelList team will help you review/draft financing docs to make sure pro-rata rights are included. Pro rata and how to manage pro rata will be covered in Spearhead programming.

Learn more from Fred Wilson on why pro rata is so important.

WHAT HAPPENS ONCE I HAVE DEPLOYED MY FIRST $200K?

We will review your portfolio, and if the ground rules are met, approve anot‍‍‍her tranche of funding.

HOW WILL I KNOW IF I MET EXPECTATIONS FOR ANOTHER FUND?

The primary criteria is staying focused on high quality pre-seed opportunities and participating enthusiastically in Spearhead. Your portfolio should have an average pre-money or cap well below $10M.

Evidence of quality that we look for includes:

  • Backable founders with track records of shipping product

  • Customer, user, or revenue traction

  • High quality co-investors with domain and stage expertise

  • Follow-on investments with markups by reputable venture investors

  • Strong early hires

  • Admission to a top-tier accelerator after your investment

CAN I INVEST IN DEALS WHERE OTHER SPEARHEAD ANGELS ARE INVESTING?

Yes. While we’d like to see you develop your own proprietary dealflow, there is nothing preventing you from co-investing in a deal with other Spearhead angels.

DO I HAVE TO PRESENT MY INVESTMENTS TO A VC OR INVESTMENT COMMITTEE?

No. There is no committee nor investment memo to write. This is your fund and Spearhead does not weigh in on individual deals.

WILL MY DEALS EVER BE REJECTED?

Unlikely. Rejection is possible when:

  • You’re investing in a foreign entity or an entity with flow-through tax liability (i.e., no LLCs)

  • You’re investing in anything involving cannabis, porn, or other obvious vice industry (compliant online gambling is ok)

  • You have a conflict of interest on the deal (e.g., you own adviser equity) and AngelList believes you’re investing for reasons other than financial return.

If you have a conflict of interest, you must disclose it and run it by AngelList first.

CAN I TAKE ADVISORY SHARES IN COMPANIES WHERE I INVEST?

You should not take advisory shares. This presents a conflict of interest and generally is not considered “founder friendly.” If you do take advisory  shares, best practice is to pledge these to your fund. ‍‍‍‍‍‍

CAN I MAKE INTERNATIONAL INVESTMENTS?

Angel investing is a local sport. You should invest exclusively in the country where you reside. If there’s a unique circumstance where you must make an international investment, yo‍‍‍u are able to do so provided that the company signs a standard foreign tax reps letter.

CAN I USE THE FUND TO INVEST IN ANGELLIST SYNDICATES OR OTHER SPVS?

No. You are welcome to invest in AngelList syndicates or SPVs with your own capital, but not with your Spearhead Fund.

ARE THERE ANY REQUIREMENTS FOR SPEARHEAD AROUND GOVERNANCE MATTERS, LIKE INFORMATION RIGHTS?

No. That said, you can try negotiating these rights for yourself.


HOW DO I RECOMMEND A FOUNDER TO SPEARHEAD?

Please use our nomination form. If we think there could be a fit, we will contact the nominee directly to begin the application process.

NOMINATE