‘King of AngelList’ Gil Penchina on why he hates VCs and loves Reid Hoffman

Gil Penchina – a former vice president and general manager at eBay who later ran Wikia – is now a prolific angel investor. Here he’s pictured back in 2014. Photo credit: TechCrunch.

Gil Penchina hates VCs. The serial entrepreneur believes their primary goal is to line their own pockets.

“For most VCs, they go to board meetings then leave,” he told the H2O Global Innovation Leadership Summit yesterday in Silicon Valley.

I’m technically now a self-hating investor.

He looked back on the days when he was trying to raise money for Fastly, the content delivery network he co-founded. One particular incident he’ll never forget involved a VC in Palo Alto. The investor sounded very supportive and told them things it could do to help but didn’t follow through when called upon.

“Silence. Not even a reply, not even an ‘I’ll get to it’ or ‘Give me a week, I’ll work on it.’ Literally didn’t bother to reply,” says Gil.

“I’ve become an investor so I guess I’m technically now a self-hating investor because I, by large, hate VCs,” he quipped, drawing laughs from the audience.

Rather than join a major VC firm, he took a different route, becoming an angel investor. One of the early folks at eBay, Gil used his money from the company, which IPO’d in 1998, to start angel investing.

Investing allowed him to avoid the consultants from McKinsey and Bain that flooded into eBay – “a way to hang out with the people I liked instead of the people I worked with,” he joked.

Unlike VC firms, most angel investors don’t get into startups purely for the money but because they’re successful, want to give back to the industry, and they like the company they’re investing in, Gil believes. These people are involved in a very personal way and are genuinely trying to help out. They don’t just promise things – they do them.

“I look for someone who’s emotionally involved where they should be, who’s calling and trying to help, someone who’s brainstorming with me, coming up with ideas, and coming back to say, ‘hey I looked into this,’” he stated.

Today, Gil leads the biggest AngelList syndicate – hence the “king of AngelList” badge – that has done about a hundred crowdfunded deals at US$4 million apiece – including one he backed not because he was expecting to make money off of it but because his daughter loved the product.

There are exceptions

Gil’s revulsion toward venture capital, however, isn’t absolute. There are a few good VC guys out there – and one of them is LinkedIn co-founder Reid Hoffman.

Dating game