Syndicates / For Founders

Overview

A syndicate is a VC fund created to make a single investment.

For example, suppose an angel wants to invest $250K into a company. They personally invest $50K and ask 10 other investors to invest alongside them. They pool the investors into a fund which invests another $200K.

Syndicates allow angel investors to get you additional capital and value.

Syndicate leads earn carried interest on the additional capital that follows them. This increases their stake in your company's success.

Syndicates are private.

Founders can control distribution and limit which investors see confidential info.

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Founder case studies

Cruise Automation

Before being acquired by GM in 2016, Cruise privately closed funding from two syndicates. Read the interview with investor Tikhon Bernstam.

Clutter

After privately closing funding from a syndicate led by Brendan Wallace, Clutter raised back-to-back rounds with Sequoia: a $9M Series A in October 2015 and a $20M Series B in April 2016.

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$360M

CLOSED VIA SYNDICATES

990

STARTUPS

$2.8B

IN FOLLOW-ONS

How it works

1. Discuss terms with the lead

You should discuss how much the syndicate will invest, on what terms, who should be able to invest, what information will be shared, and when you'd like to close.

2. Share info about the raise in a private deal enviromnent

Leads typically write a note to the syndicate investors about why they like the investment. They'll also share the terms of the investment.

3. Invite investors

The AngelList-affiliated funds are under NDA and are automatically invited to invest in all deals. Founders and leads can invite additional investors to the private deal environment.

4. Close the deal

Once documents are signed, AngelList collects funds and wires them to you. AngelList can close deals in as quickly as 72 hours.

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Privacy

Deals are only visible to individuals invited by the lead or the founder. Founders and leads work together to decide what level of distribution is appropriate. Most deals have fewer than 20 investors involved:

Leads share information about the company and round in order to explain the opportunity. You should discuss what information you feel comfortable sharing with your syndicate lead.

Ultra privacy-conscious founders can limit access to investors by gating sensitive information behind an additional layer of privacy (e.g. Docsend) or only permitting access to investors who are under NDA.

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Who are the investors?

Syndicate investors are like LPs in a VC fund. They don't have information rights and aren't directly on your cap table. They fall into a few categories:

Funds

Funds that invest entirely through syndicates. They are under NDA, and invest $50-500K as a group per deal. These include a $400M fund called CSC Upshot and a $30M fund called Maiden Lane.

Individual investors

Other investors invited by the syndicate lead. They often have a personal relationship with the lead.

Value-add investors

Investors with expertise relevant to the company. For example, a company making a drone camera may ask AngelList to invite investors with expertise in hardware, consumer marketing or video.

All investors are vetted by AngelList for accreditation and sophistication.

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Leads

Most leads are operators who invest on a part-time basis. Many are current or former founders. Leads charge the syndicate investors a carry. This amplifies the lead's return on a successful investment.

Founders typically meet leads during their regular fundraising process. You can apply to meet leads and other investors via AngelList Intro.