One key factor in becoming a successful venture capital investor is access to high quality deal flow. The beauty of syndicate investing is that the casual investor can get access to a lot of deal flow without spending a lot of time to source them. Syndicate leads do the work of sourcing all the deals, doing some due diligence, and presenting what they feel are high quality deals. It’s then up to the investor to do further due diligence and only invest in those deals that are appropriate for them. An investor has the option to invest on a deal by deal basis and has no obligation to invest in every deal presented to them.
Syndicate leads come from a variety of backgrounds. Some work at venture capital firms and syndicate deals which they have large allocations that they can’t fully participate within their fund or existing LPs. Sometimes they will syndicate deals that don’t fit their fund’s thesis. This could be based on the industry of the portfolio company or maybe the fundraising stage doesn’t fit their fund. Other syndicate leads are independent VCs that may do this part time and they use syndicates to allow them to write larger checks.
Another category of syndicates are those that are led by former employees of startups that have grown into large companies. Many early employees of companies like Google and Uber have gotten wealthy through stock compensation and have built a network of fellow entrepreneurs. This has allowed them to become angel investors. Their network of colleagues and friends has given them access to the startup ecosystem and the wealth they’ve accumulated has allowed them to make investments as angel investors. Some of these alumni angels have joined together to consolidate their deal flow and make it available via syndicates they operate.
There are several of these Alumni Syndicates available on AngelList. While these syndicates are led and organized by former employees, they’ll usually accept and share deal flow with non-alumni. It’s another source of deal flow for syndicate investors. AngelList has a dedicated page here.
- AngelList Alumni Syndicates
Please share in the comments if you know of other alumni syndicates.
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