The Smart Syndicate

Three months ago, my friends Jake, Nick, Lauren and I were discussing syndicated angel investing and how it could work to create a bridge between interested, accredited investors and startups in need of cash and a very particular value-add beyond capital. Then, Angelist syndication went public. Suddenly, everyone was launching a syndicate and the entire blogosphere blew up with news and criticisms of the vehicle. This gave me pause. As an aspiring venture investor, whenever a new idea becomes an apparent touchstone for the future of an industry in every positive and negative direction, I prefer to step back and see where things settle as opposed to joining the frenzy. 

So I stopped trying to figure out how to accredit myself and thought about how syndication can change venture. I came to two major conclusions, one about the potential for syndication and another about how a syndicate would need to behave to achieve that potential. 

Conclusion 1: Syndication can open doors and pull back curtains

There are wealthy people - successful corporate executives, serial entrepreneurs, retired athletes, five-star chefs, acclaimed authors - whose unique experience in their fields can lend profound insight and acceleration to entrepreneurs. Those same industry luminaries may have been trying to solve a problem they’ve noted in their field forever and have no idea that someone is working on it, and could really use their support. For example, if Michael Kors was introduced to a startup called Dowery that was trying to solve a seasonal supply-demand problem for wedding jewelry that he had experienced with his brand in the past, that might be an opportunity for true value-add, let alone investment. Doors open for entrepreneurs who can take the elevator up and curtains are pulled back for investors who may find an up-and-comer who’s working on something they’re acutely passionate about solving in their own industry. Where there is passion there is productivity, excitement and involvement from the investor. 

Conclusion 2:  Any syndicate that’s going to be more than just a micro, ad hoc vc fund has to treat each startup-to-investor connection with the craft and devotion of an artist. 

These can’t be fund-and-out firms or spray and pay canvassers. A smart syndicate should exist to ensure that the matches they make and so deals they close are as transparent, mutually valuable, and long-lasting as they need to be. The syndicate researches the startups and industries where interested investors may exist and handpicks the matches that make clear sense for both parties. The investor may not want to deal with a ton of paperwork, the entrepreneur may not want to have to answer to a haranguing investor, the syndicate lives for both of these situations and any other complication that will arise. The smart syndicate is the accountability, sincerity, focus and resolution of the deal and the relationship - for the good of the potential to innovate.  

Maybe ‘bridge’ and 'connector’ aren’t the best terms for the smart syndicate. Its more a dynamic two-way velcro that creates lasting relationships where not just the economics and momentum but true synthesis make sense. 

Tim DevaneComment