AngelList Founder: ‘Frothy’ Market Puts Burden on Investors

Naval Ravikant, a serial founder and investor, once sued Benchmark and August Capital for misleading employees about the value of Epinions, a company he co-founded. Since then he’s been poking venture capital firms in the eye another way: He’s making it easier for investors outside the typical VC orbit to invest in Silicon Valley companies.

As CEO of AngelList, the Silicon Valley social network and investing platform, Mr. Ravikant has bet against conventional wisdom in valley investing, which holds that those with the best access, whether to inside information or exclusive deals, come out ahead. He argues that the landscape has changed and successful startup investing is about making the right judgment calls. While AngelList helped introduce 16 investors to Uber, only a handful made the investment.

Mr. Ravikant defends the volume of tech investing going on today. Recently, investors like Bill Gurley and Fred Wilson, have warned entrepreneurs not to drift too deeply into the red and not to bank on the assumption that cash from more investors is always available. Their concerns about burn rates come at a time when that assumption seems to have a solid basis. There is no shortage of funding for startups, an influx further fueled by the entrance of new angel investors on online investing platforms like AngelList. While Mr. Ravikant thinks startups should watch their burn rates, he argues that it’s nearly impossible to call out broader market trends. Instead, he believes investors should focus on picking winners rather than evaluating the overall economy.

The Information sat down with the AngelList CEO over a low-carb Sushirrito at its San Francisco office. Mr. Ravikant discussed everything from the rise of Y Combinator to the futility of trying to predict a bubble. This interview has been edited and condensed.