If Google just bought one of your earlier investments for a billion dollars, you should make sure potential Backers know about it. This will add 20% of dilution, since this new stock is created to facilitate the $10M raise. Keep in mind that backers are not obligated to invest--on average, syndicates raise 20%-40% of the aggregate committed amount for any one deal. Ive seen really popular deals appear and be gone inside of a day. Possibility 1 is that they raise money at a price lower than the cap, say $10M. There are lots of reasons an organization might raise an extended round, some good, some bad. Fundraising momentum is so hard for startups to build, as is FOMO (fear of missing out). Honestly, I hope if youve gotten this far, youve educated yourself enough that you dont need any of the information Im about to provide, and the only folks who are actually getting stuff out of this are people who havent yet decided to take the plunge. I dont play this card often, because I value their time, but Im friendly enough with a number of VCs in the space, and so if Im really on the fence on a potential investment (usually because I feel like Ive invested too much recently, and Im hesitant to dump more money into my angel portfolio), Ill sometimes ask friends for a gut call, or thoughts on who else is in the space, and how bullish or bearish they are on it. The minimum investment size is between $1K and $10K per deal. While I dont have concrete stats on the average check sizes that AngelList syndicate participants are writing, it generally seems like a lot of them tend to be fairly close to the minimum, which is unsurprising, since diversification is usually a good thing in venture. Past performance doesnt guarantee future results, but it does help prove your credibility.
Several of my early bets worked out reasonably well, so this year, I decided to double down on my little angel investing experiment. 
During the event well have corporate partners in the zone meeting with startups, and weve committed to invest a minimum of $25,000 into one of those startups. So if you invest $2000 into a deal with a cap of $12M, a couple things could happen when the company raises their A round. You should always, but especially early on, be aware of the fact that you need to have a very high quality filter. e. A syndicate lead with some knowledge of the industry youre in. AngelList will then email the founders to confirm. This material is provided for informational purposes only and shall not constitute an offer for any security, which will only be made pursuant to formal offering documents containing full details regarding risks, minimum investment, fees and expenses. This also impacts the timer to claim the purchase as qualified small business stock (though being totally candid, if youre buying through AngelList, you probably dont have enough access to the business to ensure that your purchase is QSBS), so dates matter a lot here. You have the luxury (and challenge) of working in a time when theres far more transparent access to information, and a larger universe of potential Backers that you want to influence. Youll usually see something like Seed, A, B, etc.
In the ideal world, this meant investors could take the long view they could make bets that their LPs might not understand until years later. There are lots of reasons an organization might raise an extended round, some good, some bad. Instead, you own .016% ($2000 divided by $12M), but since the company is actually worth $15M, your stock is actually worth $2500, and you just made $500 in sweet, sweet, paper, totally illiquid, non-saleable gains. Since subsequent rounds usually bring on new investors, existing investors risk getting diluted out of their position if a later round of funding adds a ton of new equity.
Ideally this company is also willing to open the syndicated deal to all accredited investors on the site (not just your backers). Some linger on and on, and if I see an investment opportunity thats hanging around for a while, its usually an indicator to me that the company is having a hard time completing its raise. AngelList Syndicates allow investors (Leads) the ability to invite other accredited investors (Backers) to share in their deals. Because Ive spent a lot of time in the industry, one of the first things I do, when I see a new deal pop up, is to check out the LinkedIn profiles of the founding team (and any employees they have). Its like finding a good startup idea, which can be deceptively hard. If a deal feels hot, it often becomes hot as folks rush to try to get a piece of it before they miss out. Luckily, like startup financing, you dont need every backer to like your pitch.
d. The syndicate backers are well connected and can add value beyond money. It had a very quick impact on a startups ability to build momentum in the investor community. Youll almost certainly see one labeled Cap or Post-money Cap. The cap is essentially the maximum price that you will pay when your stock converts to equity in a subsequent priced round. You have to find something that is both novel and something that you can explain in a way that makes prospective backers understand the opportunity. Good deals will also act as good marketing for your syndicate. Use the field labeled note to backers to quickly describe your thesis and make any expectations you have of backers clear here (e.g. Depending on the structure of the deal, you might also see a discount rate on a SAFE-based round. When 1855 Capital approves your request to join its Syndicate, you gain access to their current and future deal flow and can pick investments on a deal-by-deal basis. But if the deal is hot, maybe its worth taking that risk. The reality of it all is that, as an angel investor (on your own), youll have a lot less information to go on than an institutional investor, and thats to be expected. This isnt just the entrepreneurs job you should work closely with them and help them understand how investors will perceive their profile. For me, AngelList and Syndicates, are about opening up the marketplace of potential investors and startups in ways that have never been done beforebut always with an eye to quality and attention to detail. Youll almost certainly see one labeled Cap or Post-money Cap. The cap is essentially the maximum price that you will pay when your stock converts to equity in a subsequent priced round. You canback our fund(and see what we have previously invested in independently), which is a commitment to investalthough not an absolute obligationand then well launch syndicates for specific startups when weve found the right ones. A few months ago, I successfully raised a small AngelList Syndicate to do so. Get commitments to the current round, and list them, before your syndicate launches (so the round looks more full when people evaluate your deal), Do a syndicate deal that is open to any accredited investor, not just your backers, Ask people that are connected to you or the company to follow, like, and share once youve launched the syndicate. While I dont have concrete stats on the average check sizes that AngelList syndicate participants are writing, it generally seems like a lot of them tend to be fairly close to the minimum, which is unsurprising, since diversification is usually a good thing in venture. A syndicate starts by getting backers.
This is helpful information because what it tells you is how much equity the company is giving up to raise this round. Syndicates further democratized the marketplace between investors and startups. Congratulations.
Please. Ideally, youd like to work with a syndicate that has successfully syndicated deals for several companies and provides value after the close. 
Getting a syndicated deal setup has overhead, for sure, but the leads investment is almost always around, or even less than the actual minimum investment from the LPs. Leads can decide what information is accessible to investors, or limit information to only those investors who are under NDA. If youre not familiar with AngelList syndicates, heres how the company explains them: A syndicate is a VC fund created to make a single investment. Access to deal-by-deal investing also requires evidence of sophistication.
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Investors self-report their accreditation status during sign up. The difference is extremely important, especially if youre thinking about timing from a capital gains perspective. This is more common for lead investors, but its rare that I see syndicated deals that have pro-rata rights. This doesnt mean that theyre raising that much from AngelList, but that its the full size of the round. 7 Steps to a Successful AngelList Syndication. In 2012, my last company sold to Oracle and I decided to start angel investing informally. Getting a syndicated deal setup has overhead, for sure, but the leads investment is almost always around, or even less than the actual minimum investment from the LPs. You dont want Backers to think youre cherry picking the best deals for yourself and syndicating the more questionable ones in order to share the risk.). Obviously, leads dont want to syndicate bad investments, because they dont make money if you dont make money, but most of their money will be made off of your investments, not their own. Examples are for illustrative purposes only as past performance is not indicative of future returns. So if the company is raising $3M at a $12M pre-money valuation, the post-money valuation will be -- you guessed it -- $15M. After that acquisition, Willis became an active investor noted for his participation in companies across many different verticals (from synthetic biology to computer vision). The reality of angel investing, and venture, generally, is that its very time-sensitive, and a deal happens when it happens. $3M on a $15M post-money valuation is a very healthy round, because the equity being sold is 20% of the company. The hardest to try to prove is No. Here are two suggestions from other sources: call a few people or prepare a hundred page investment memo (the right answer for the average early stage deal is a lot closer to the first suggestion than the second). That being said, we do emphasize the central Pennsylvania campuses at: All these areas are underserved by capital sources from Philadelphia, Pittsburgh and Lehigh Valley, and can especially benefit from our close working relationship with Ben Franklin Technology Partners of Central Pennsylvania.
Traditionally, VCs only had to market themselves, and their portfolio performance, to a small group of institutional investors. You dont get to buy your stock today, and youre also buying it at a completely unknown price. Youll usually see something like Seed, A, B, etc. In this installment, were going to take a look at how deals are actually structured (Im going to use AngelList as an example, since thats where most of my deal flow comes from). It could also be a mechanism to set an intermediate price ahead of a round, as well. I remember when AngelList first came out in the U.S. In the Deal-flow section briefly describe how you get deal-flow and which deals youre going to choose to syndicate via AngelList. There are definitely certain times when specific names show up, and Ill nearly blindly invest, because I agree with those peoples investment theses (Mike Volpi and Martin Casado are two great examples of this in data-land, and I also have strong affinities for the Amplify team). Smaller allocations, larger setup costs for each LP. For your first deal (and every deal), Id recommend you find a company that has strong traction and an opportunity that is easy for your Backers to understand. The amount here will indicate how much money is being raised in the round in aggregate. Most likely our first investment will be through thepartnership we announced with ResolveTO, where were running the Corporate-Startup Connection Zone at the event (Jan. 2527, 2017). For more information about the cookies we use, see our Privacy Policy. If you have a cap, as well, its a pretty darn good deal for the investor.
A good investment thesis describes how you will source deals and how you will make decisions on which to investments to make, in a way that is compelling to your prospective Backer. On occasion, Ive even gone so far as to do some light backchanneling if I have mutual friends. You should expect that youll close on about 70-90 percent of the total commitment. Developing the ability to explain to people why your thesis is novel, correct, and not crazy can be very hard. Its also worth noting that you might see SAFEs that are uncapped, which is kind of a crappy deal for the investor. You might see something like Seed+ or A1 or something like that, which usually indicates that the round is an extension. With a SAFE, youre not actually buying equity, youre paying for the promise of equity later, and the SAFE will convert to equity in the next priced round (meaning the next round where money is exchanged directly for equity). Though we expect to be early or even the first equity investors in a team, we are interested in being a co-investor with other early stage venture funds. Its generally a good thing for the investor. A lot of angel investing is just sitting back, consuming the information, and waiting for the deals where you really have conviction. For seed investments, this will often say raising as equity or raising as SAFE. In the event that theyre raising as equity, the implication is that this is a dilutive round for the business, and the SPV is acquiring stock directly from the company. This is helpful information because what it tells you is how much equity the company is giving up to raise this round. Possibility 2 is that the company raises money at $12M or more. Syndicates make the process of launching a venture capital fund much easier, but they dont change the fundamentals of what makes a good venture investor. There are a number of benefits to investing in the arenas that I know really deeply: I generally know who the good VCs are: One of the fastest filters that AngelList investors use is to look at who else is co-investing in the deal. The types of firms that lead investments will typically demand a certain amount of skin in the game for the investment to be worth it to them, and that ballpark tends to be in the 15-25% range. You could waive your pro-rata rights, and then youd end up owning 0.8% of a $50M company, or you could double down on your investment and choose to exercise your pro-rata, which would require you to pony up an additional $100,000 (because after dilution, you would have the right to purchase .2% at the $50M price) to maintain your 1% stake. Recently, AngelList came into Canada. Tyler Willis is an angel investor in early-stage technology companies and an enterprise software executive. Dont overwhelm them, but helping your Backers get periodic insight into your process is the easiest way to keep them engaged over a long period of time and make sure that theyre ready to do a deal when you come knocking. Learn more about membership. Im putting together an AngelList Syndicate to invest, when the opportunity is available, in companies Ive seen have the best progress from my very early-stage advising and investing. You should strive to make your syndicate deals the best deals you do, period. And finally weve arrived at the real kicker, and why syndicating deals on AngelList can be a really good deal for syndicate leads. An accomplished executive and angel investor, Willis specializes in helping early-stage startups become world class businesses.
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