Leaders take advantage of the fundraising process and they are responsible for managing their relationship with backers.Not having to deal with numerous and different investors.Less risk: leaders have vast experience in investing and thus can differentiate good from bad deals.Less paperwork than if they were investing on their own.Better dealflow by having access to investment opportunities they might not be able to find by themselves.They also get paid a carry (capital gains generated by an exit or dividends paid) in return for their ‘leadership’ on a project they would invested in anyway.By investing more capital per deal they might have access to better investor rights.They can reach startups that might have high minimum commitments they couldn’t match on their own.Syndicates offer great advantages to both leaders and backers. What are the advantages for all parties involved? There are some minimum requirements that any investor needs to meet in order to be able to participate in syndicates. What’s an accredited investor according to Spanish law?Īngel syndicate investing will soon become a regulated activity in Spain, thus protecting both investors and startups. Investing in startups is hard and risky, but co-investing might decrease the risk associated to it.Ī backer is an investor that either does not have a lot of experience in startup investing or, even if he or she does, he’d rather allow someone else -the leader- manage the investments and choose the startups in which to invest. It’s worth noting that the fact that an investor meets this requirements doesn’t guarantee his or her success. Good judgement: knowledge and market experience that might result key in making the right investments.If this dealflow is propietary -as in, exclusive to the investor- the chances of scoring good deals increases. Propietary dealflow: dealflow refers to the to the rate at which investors receive business proposals or investment offers. Access to capital: business angels with a good track record or successful startup founders that have the capital necessary to invest in startups.Naval Ravikant, co-founder of AngelList, has famously said that there are three characteristics a syndicate leader should meet: They tend to be angels -or successful startup founders- who have been part of the industry for many years and know its ins and outs. Syndicate leaders are business angels with vast experience in selecting investment opportunities and investing in then, in various technology sectors and with dealflow that most investors don’t have access to. And now we’ll answer specific questions related to what Startupxplore is all about: syndicate funding for startups and investors.Ī syndicate is an investment vehicle that allows investors (backers) to co-invest with relevant and reputable investors (leaders) in the best startups in the market. In a recent post we already touched on this topic by describing the differences between angel syndicates, crowdfunding and boostrapping. Last week was an important week for Startupxplore: we opened registration for ‘backers’ on our platform, as we get ready to launch the first angel syndicate in Spain soon. Many of you may already know by now how syndicate funding works, but given the fact that it’s a new (and growing) investment trend, we figured this would be the right time to explain with more depth what a syndicate is, how it works and why it can be interesting for both investors and startups.
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