Why LPs Are Using STABLECOINS to INVEST in Startups | Avlok Kohli on TBPN April 4th

Fantastic. We got Avlok coming in. I'm sure everybody— all right, there he is.

Avlok, how you doing?

What's going on?

What's going on, guys? How you doing?

We're good. We're good. It's been a great week. A lot of, a lot of big news. I'm not sure what you've been following more closely, AI or tariffs, but everyone's following one thing or another.

Everybody's got something.

Everybody's got something worming in their brain. But yeah, I mean, could you just do a quick intro on you and AngelList for anyone who doesn't know, I guess?

Yeah, Avlok Kohli, CEO of AngelList. I was actually recruited in almost 6 years ago now, so I've been running the company for almost 6 years. Prior to that, I'd started 3 companies, sold 2. One of them was to Square, so I spent almost 3 years at Square as well, pre-IPO to post-IPO.

Um, uh, I'm, I'm curious. I mean, a bunch of stuff I want to get into. Uh, where should we even start? I think it's probably helpful for people to have like, you know, sort of like the refounding of AngelList because AngelList is a company that I feel like has just been in the timeline. Obviously we built the show around X. AngelList, I think, like grew with Twitter in many ways. It was sort of like the technology platform behind what was happening in the timeline. And in the same way that Twitter's evolved massively, AngelList has done the same. But would love that backstory before we get into everything else.

Yeah, the way to think about early AngelList was, um, there were a lot of, uh, different experiments as the team was searching for product-market fit. And so, you know, 2020— or 2010 to call it like 2018, 2019, um, sort of spawned 3 different businesses within AngelList. It was the SPV business, uh, which is really the syndicate business, uh, there was Talent, which was to help startups find talent, startup talent. And the third one was actually Product Hunt. AngelList had bought Product Hunt early on. And so by the time 2018, 2019 came around, there were kind of these three different businesses where they really just connected with a thin thread of founders need to raise capital, they need to hire people, and then they need to launch their product. But outside of that, it was actually very hard to do all three of those under one roof just because the business models are different. Uh, so at that moment, what happened was kind of a splinter, kind of a split, uh, and Talent spun off on its own and then Product Hunt separated a bit more. And then when I came in, I actually took the SPV business and I spun it out as its own company. And, uh, we got to work and we kind of took it from an SPV business to venture funds to— we invented a whole new category of rolling funds. And then we got into roll-up vehicles, uh, which is actually how Jordy and I originally kind of got connected. And then we got into startup products. And so today we're kind of a, you know, the place to go to if you're going to start, scale, launch a venture fund. We're now in private equity. We actually manage the scout funds for a lot of large firms as well. So we're kind of an index now of what happens within venture.

No, it's amazing. Can you, can you talk specifically about, you know, sort of like accelerating product velocity in AngelList? Because it just felt like you came in you had this sort of warm-up period, and then it just felt like every single quarter there was like a major new product launch, and you sort of like awakened the beast, right? Like there was so much potential there. Uh, if you were involved in the startup, you know, industry at all, you had invested in an SPV, maybe you were in a rolling fund, uh, maybe you hired, maybe you got a job, maybe you launched a product. So everybody was touching sort of products in the ecosystem, but then you had to kind of like ramp up and basically say like, you know, we're going to kind of bring this crazy product velocity. So I'd love to hear like how you did that and then how you're applying that now. Specifically, there's, you know, a bunch of new opportunities I think that are popping up.

Yeah, I would say just at the core of AngelList, AngelList has always held the founders at the top of the pedestal. And we've always believed that product leads everything, product velocity leads everything. And so when you have that in your DNA, the question you're always asking is what is the mix of people you actually want in the company? So we actually have a fairly high percentage of our team that are like ex-founders. And so what happens when you put a bunch of ex-founders in a room? What are they going to do? They're going to look to be ambitious and how can you actually move into an adjacent opportunity? How can you go reinvent a whole new product category? And so a lot of the original thinking was, hey, let's actually get back to product innovation and let's get back to actually doing things that only we can do. Right. And that's the one question we do ask. And to be clear, we don't get it right all the time. But the one question we do ask is, if we didn't exist in the world, would this product exist? And if it doesn't, then okay, great, we should go do it. But if it's going to exist without us, we're probably not the best suited to go do that. And so we do ask ourselves that. Quite, quite often.

Can you talk about AI in the business, how you guys are leveraging it to just, you know, you're in, you know, investing in a company is very simple on AngelList. Like I'm a part of a scout program. It's very seamless, you know, painless process. But then under the hood, there's— you're dealing with different entities and you're dealing with— yeah, there's the code is like the easy part. Like the law is really the hard part and the challenge. So I'm curious how you're applying AI in the business to make, you know, internal team members more efficient, to make— and it's good, good for the world if you can sort of like accelerate capital formation, investment and all these things. It can accelerate the world. So curious about that.

Yeah. Thank you, Jordy, for recognizing that. It's like an iceberg product, right? There's so much underneath the hood. Yeah. You know, the initial investment is actually just the beginning of that relationship with that company on behalf of the fund. And so for context for others, when an investment is made from a fund into a company, it's typically a— it can be like a 10-year, 15-year hold period. And that's just because of how illiquid venture typically is. These companies need time to mature. And so what ends up happening is over the quarters, months, quarters, and years, there's all sorts of activity that can happen within that investment, all sorts of activity that can happen within the fund. And there are real, like, legal repercussions, financial repercussions if you get it wrong. And the way we're using AI is these are all the back office functions. And so typically humans would manage all the different workflows. What we've started looking at is how do you take all these different workflows and then how can you actually have AI agents starting to take on some of those workflows? Now we have to be careful because the, you know, the when you use ChatGPT and you get every time you ask a question, you get different answers. That's beautiful. That's product market fit, right? You're like, write me a poem. Write me many different poems. Awesome. You don't want that when it comes to your finances, right? It's like, hey, what's, you know, what's the share price? You don't want 10 different share prices, you want one. Uh, and so we're, we are, uh, pretty bullish on taking that and having it automate huge parts of our back office. And that's already starting to happen. Uh, and we think there, there are ways that we can actually then have, uh, a lot of the, uh, folks that are doing some of the back office work move up the stack in terms of the type of judgment they apply on all the different workflows there. So that's like one piece. The second that I'm personally extremely excited about is we launched a front-facing product called— it's our intelligence product and it's in beta. It's still new, so we're not ready to fully talk about it with the world. But what we're doing there is we're actually creating an agent to go look at all private market data. So we have access to a lot of unique aggregated anonymized AngelList data. And we're actually looking at building partnerships with many other providers. So for example, you can ask a question like, who left OpenAI in the last month to start a new company? That can help you with deal sourcing. And you can imagine it scales to many more companies. We're also looking at how do we help you get ready for your briefings, for pitch meetings while you're— yeah, while you're actually like in the middle of a pitch, post-pitch, great. Take the transcript and we can help you do a lot of the necessary research, market map, the full analysis. So give you time back. And we think of this as we want to build a co-GP. We want to help you make more money, right? We can help you find better deals. Yeah.

What about on the founder side? I could imagine that, you know, there's all these new benchmarks for fastest company to $100 million ARR. Valuations are all over the place. Are you thinking about building any products for entrepreneurs? They upload their deck and then they say, oh, well, like you should probably expect you know, 10 on 80 pre in this, you know, to be kind of in the fairway, maybe go out there and get more. But here's at least our take on it.

100%. We're already in that world. You know, it's awesome. Classic line. The future, future is here. It's just unevenly distributed. Yeah, that's basically—

yeah, it's funny how entrepreneurs try to understand how to price their rounds is really they talk to a handful of investors who just reference like the last 2 or 3 rounds they saw get done that were maybe not even in the same category. And then it's just like completely guessing. And I think it's, you know, super like you guys will be able to pretty quickly, I imagine, give a pretty precise and say like, here's where we predict your round is going to get priced and sort of like building that feedback loop.

You claim to be cursor for dogs, but what does that really work?

How do you—

it feels like we're at this amazing time right now. You know, some people don't think it's amazing. I think it's great of venture maturing. And then you see like the convergence between private equity and venture. You guys launched some products more geared specifically for private equity, but how do you see that line sort of like blurring over time? And I guess like, how are you kind of adjusting your product roadmap for that reality?

Yeah, the way to think about the way we're approaching product is We have the kind of vertically integrated part of the product where you come in, one, you know, one-stop shop, you can launch Scale Venture Fund, which also allows us to manage scout funds for some of the largest firms. And then we actually have our software that's getting unbundled and folks want to adopt that. So some of the largest private equity firms actually adopt our digital subscriptions product, or some others can adopt our banking product. We actually, we run banking underneath the hood. We've actually built a whole banking infrastructure, which is what allows for a lot of these smooth operations. And so, you know, as we're seeing the market evolve, our roadmap is effectively evolving to continue to keep taking on larger and larger funds for this vertically integrated product. And then for the largest ones where there, we can support them for any of their needs. And that's actually working quite well. In terms of what we're seeing in the market today, we are seeing a bifurcation. So what's interesting is if you look at year over year within our data, we're actually seeing capital flows increase Q1 2024, Q1 2025 by almost a double and into just venture funds. And like, we can talk about SPVs and all of that, but like, just venture funds alone, capital flows are almost— have almost doubled. So there's definitely a bounce back. There's more optimism, right, that's coming in. But it is being— it's sort of concentrating into a certain subset of managers. So you kind of have, you know, call it $0 to let's say $100 million, you kind of have a divide and then you have like the mega firms, right? And then the mega firm strategies are actually also bifurcating, right? They all have kind of their own, their own view on things, uh, and what they're going to go after. So it's a very different market than 2019, 2020. Uh, and we're not seeing as much of, you know, because what happened in 2021, 2022 was you had crossover firms really come in, right? Um, large private equity firms.

Yeah.

Public firms come into venture. We don't see that anymore. I think we, at least we're not seeing too much of it, maybe like here and there, but generally it's the venture firms that are scaling up and they're now starting to push up into different asset classes.

How do you think of, um, the job of GPs over the next 10 years? I, I've, uh, you know, everybody's, you know, been running the analysis of like how safe their, their job is, right? Like if you're a writer right now and your job is to summarize information and, you know, repurpose information and just put it out there, you got to be pretty worried. I think investors in general are pretty safe because people want to give money to one person right now and have them be sort of responsible for returning that money and hopefully a lot more in the future. And venture is about this combination of not just picking, which is like you can be very analysis-driven, of the market and the product, but also the people. But then the big thing in venture is, you know, I expect AI to not necessarily dominate venture so quickly because likability and access are like such big parts of it, right? It's like, you know, somebody wants Avlok Kohli to angel invest in their company because you're the CEO of AngelList. And like, an AI could be like, you know, better at finding companies, but that doesn't mean they're going to sort of like win the allocation. So Is your thesis, you know, let's give investors AI tools to be able to be better investors and make more money? Or do you see a world in the future where people are setting up, you know, sort of a fund on AngelList that's entirely, you know, the GP is effectively, you know, a machine itself?

Yeah, it's a good question. I don't know who said this, but I picked this up from some podcast. When a founder picks an investor, they're doing it because they believe that person is going to increase their probability of success.

Yeah.

And in order to increase the probability of success, you're really looking for a partner who can help you solve any, like, number of problems that can come up. Some of it's brand to help the recruiting, some of it's like actual, like, operational help. And it could be many more of those, right? But you need to partner with someone so you can actually have a reasonable chance of success with the company. So I don't think that's ever going to come from an AI, at least today, at least in the form that we know of it today. So as we think about the role of the GP, we think it's going to continue to stay the same. I think what will get challenging is I do think there will be more capital that floods in because even at the earliest stages, you know, folks are talking about how valuations are decreasing. Yes, at the later stages. At the earlier stages, it's increasing. So pre-seed, seed, Series A, there's just a a huge amount of capital looking to get in. And the actual root problem is that the startups don't need that much capital at the early stages. So what you have is a supply-demand mismatch. And so the only way the valuations go is up, right?

Yeah.

And so the access question and problem is only going to get worse and worse. And so we still think the human, the GP, is always going to be in the loop. So the way we think about the tooling that we're building is is they're meant to amplify the investor. They're meant to help them make better decisions, but it can't ever help you become likable to the founder or help you get access to the deal, right? That's going to be incredibly hard. Um, and so we think that it's about enabling them. So really, there's going to be more leverage to the best investors. So actually, the power law is going to get even more concentrated, um, because even the tools that we're building are going to help investors understand very quickly the lay of the land. Right. So one thing that's actually very hard today is when you're listening to a founder, you're doing a pitch meeting, you generally like, you don't quite know, okay, who are all the other competitors? Who are the other founders of those competitors? With one click, we're just going to make it easy. And it won't be just Sauce. I'm sure there are other tools that will come out of like one click, you get a full lay of the land. And so you have full visibility on what's going on with this company, what this founder wants to do. And so I think leverage will increase to the best investors.

Makes sense.

Makes sense. I don't know if you have a hard stop, but I did have one more question around how your thinking around stablecoins has evolved. You guys were very quick to adopt stablecoins. I think it was in 2021 or early 2022 that you rolled them out. That was probably from user demand being like, I have a lot of money on-chain and I want to put it into startups. Now, I imagine I'm a long-term believer in the power and value of stablecoins. But I never in using AngelList at any point in the last 2 years was like, you know, I want to fund this investment via stablecoin. And so I'm curious how you think about it broadly and are you using them behind the scenes at all or you just, you know, you said you talked a little bit about your banking infrastructure.

Yeah.

And I would assume that that's still based on traditional fiat rails just because beauty of venture is like sometimes you want to close an investment quickly, but we have same-day wires and those like work pretty well. And then you're not like trading in and out of assets like super rapidly or anything like that. And so, but anyways, I'm curious to hear how you're thinking about stablecoins broadly.

Yeah.

So we originally added stablecoins because of user demand and it was like extremely aggressive in terms of like demand, you know, and I was like, fine, let me go, let me go figure this out. And at the time we actually looked at all the who's who providers and none of them could really quite fit the use case we had.. And so we eventually actually worked with a startup and ended up building out exactly what we needed. And now they're actually doing pretty well and they're scaling out.

Was that Layer 2?

Yeah, they renamed themselves to RAIL, R-A-I-L.

I'm an angel as well. I remember they were saying like, we got, we got Avlok Kohli, you know.

That's awesome. So what's interesting about stablecoins on AngelList is when the biggest use actually comes from the biggest pain from when LPs fund. And the biggest pain is when you're trying to move money internationally. And so we actually see a huge amount of demand from international LPs trying to move money into the US. Because if you've ever tried to send a SWIFT, God bless you if you have, it's insane. It literally takes days and you just don't know where the money is. And sometimes bank will just hold onto it and they won't even tell you because it's got stuck somewhere in the middle. With stablecoins, you're able— it's one hop, you're able to get the money right into the US. It goes through all the same compliance laws and everything, but we see a huge amount of demand for that. So it's not necessarily in the fund side to companies because you're right, there's not that much trading in and out, but it's more on the LP side into the fund.

Yeah. Well, yeah, that's very, very cool.

Last, last question I have for you, then we will let you leave. I know, I know we're 5 minutes over. I'm just very curious. Have you seen Looking at some of these sectors that are especially overheated or potentially in bubble territory, we could argue whether AI is a bubble or defense tech is a bubble. Have you seen any near-term slowdown in defense tech investing this year? I'm sure you don't have the data in front of you, but I'm curious. That feels like one that is still very hyped, but it's potentially investors like sort of have their bets now and they're letting, you know, want to let their kind of bets play out.

Mm-hmm. No, I was actually just talking about this with someone else the other day. It is still going on with defense tech. I think we're actually just entering a sort of a golden age for the US wanting to basically uplevel all the technology in the military and the Navy. So I'm actually not seeing it slow down. I agree with you that there is— it feels like it's a bubble, but the beauty of financial markets in general is you'll just get bubbles and then you'll get a few great companies that will come out of it. Yeah, but I haven't seen that particular bubble sort of like wind down yet. We're still seeing some pretty active, heavy, heavy investing there.

Very cool.

Makes a ton of sense.

Fantastic. Well, we'd love to have you on to be our private market I mean, you have all the data. Yeah, yeah, yeah.

This is great. Thanks so much.

Thanks for joining.

Yeah, likewise. Good to catch up.

Have a great weekend.

Bye.