The following is the second in a series of profiles of syndicate leads. I first got interested in syndicate investing by listening to his podcast interview with Meb Faber in 2018 and he was the first syndicate lead that I backed.
Hopefully this series helps you become a better investor and discover syndicate leads that you may want to back. (The first profile was Ashley Flucas.)
Please contact me if there is a particular syndicate lead that you would like profiled.
Forefront Venture Partners
AngelList Syndicate: https://angel.co/forefront-venture-partners/syndicate
Please briefly give us your background and how you got into the venture world?
I have been an entrepreneur my whole life. I have founded and sold several companies. After selling a company early on in my career, friends and family members began asking me for advice and investment for their startups. I did that for a few years and then started expanding my startup investments beyond family and friends. Eventually, it became my full-time occupation.
How did you decide to start syndicating deals? How did you decide to create your firm entirely around syndicating deals?
When AngelList introduced the syndicate feature about 6 or 7 years ago, I thought it was a great idea. At the time, I had already built a strong organization to support my venture investments. I had great deal flow and was doing extensive due diligence. And I had no interest in raising a fund. The syndicate concept—the idea of sharing the deals I was investing in with like-minded investors—made sense to me. And when I started the Forefront Venture Partners syndicate, I decided to really focus on what investors like me wanted. We want in-depth deal vetting and due diligence. We want leverage to negotiate the best possible terms. We want opportunities to add value to the companies we invest in, which often includes introducing them to potential customers, referring talent to hire or providing strategic guidance. We want regular updates from the companies we invest in. So these are the elements we bring together for members of the Forefront Venture Partners syndicate community. And I use the word “community” intentionally because the other important benefit we provide is opportunities for the members of our syndicate to meet with and learn from each other, to share ideas and deals, and to meet the founders of the companies we invest in. We do this through the live events we host (although this has becoming more challenging during Covid times).
Please describe the types of deals that you syndicate? (sector, stage, etc.)
We are industry agnostic and invest in Seed and Series A rounds, as well as bridge and extension rounds. We only invest in post-revenue companies that are demonstrating consistent revenue growth. We only invest in companies with great teams, bringing deep domain expertise, an innate understanding of the problem they are trying to solve, and the potential to credibly scale the business. We have a strong preference for companies that are demonstrating early evidence of having identified efficient, scalable, paid customer acquisition channels, a low ratio of customer acquisition cost to lifetime value and a quick time to recoup customer acquisition cost. We only invest in companies that are capital efficient and can scale quickly without a lot of additional capital. And we look to invest in companies where the Forefront community can add significant value beyond capital.
What was the first deal that you syndicated? How did you source that deal? How has the investment turned out?
What is the approximate frequency of syndicated deals that you do?
We share every deal we invest in with our syndicate investors and we invest in about 8-10 deals per year. We are very selective and do a lot of due diligence, so that sort of cadence works well for us.
How important is getting information rights and pro rata rights in the deals you syndicate? Do your portfolio companies share regular updates with syndicate members?
We require every company we invest in to sign an agreement before we invest committing, among other things, to give us pro-rata rights and to provide monthly, detailed investor updates. We place a very high priority on both of these rights and would not invest without them.
What do you look for in syndicate members?
Forefront is a community and we look for members who can help our portfolio companies or refer promising startups to us. Although it’s certainly not a requirement, the assistance we provide to our portfolio companies is how we strengthen our value as an investor—by adding more than just capital. That is what has made us a sought-after investor. So we always look to add more investors to the community who are willing and able to help our portfolio companies in any way they can.
What websites, podcasts, blogs, etc. do you follow to keep current on the angel/venture capital world?
Well, of course, I listen to every episode of The Pitch podcast on Spotify. And I read many blogs including Strictly VC, Pro Rata by Dan Primack, Data Sheet by Adam Lashinsky, PitchBook News, Crunchbase Daily and Stratechery by Ben Thompson.
What books would you recommend to someone interested in the angel/venture capital world?
What’s your favorite book of any kind (fiction or nonfiction)?
I am an avid reader and asking me to pick just one book is like asking me to pick a favorite child. Recent books I’ve enjoyed include: A Gentleman in Moscow by Amor Towles, At Large and At Small by Anne Fadiman and The Obstacle is the Way by Ryan Holiday.
How can people reach you?
- Email: firstname.lastname@example.org
- Linkedin: https://www.linkedin.com/in/philnadel/
- Twitter: https://twitter.com/NadelPhil
- Website: https://www.forefrontvp.com
- AngelList Syndicate: https://angel.co/forefront-venture-partners/syndicate
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