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If you track the venture capital industry it would be hard to miss the conversation going on this week over AngelList “Syndicates.” My favorite new VC blogger, Hunter Walk, weighed in with some thoughtful comments about how Syndicates might actually pit, “ angel vs. angel.” Must be doing something right!
Tim Friedman, Founder, PE Stack , said, “If I could offer one piece of advice to today’s managers, it would be to take the time to understand the demands of the modern institutional LP. We are also seeing technology evaluation as an increasingly important part of LP operational due diligence.
Part of the magic of revenue-based financing is how historical performance and strong, achievable financial projections are ultimately the backbone of how RBI/RBF investment decisions are made.” Coinvestors: Flexible VC terms have not been standardized, which may make the investment harder to syndicate. Short track record.
I personally believe that one of the major drawbacks to venture capital in Europe is chronic under-financing and people skirt around this issue. Hence, financing rounds have been smaller (roughly a ratio of 5 to 1 when comparing US to EU). Even Dropbox and Etsy have done far larger rounds to finance their growth.
We are syndication agnostic – happy to invest alone and equally happy to invest with firms we like to work with. Many of these companies raise less than $3m coming out of TechStars – all of them are subsequently in our zone for the next round financing.
By being in a pool of other fund investors, the LP meetings and co-investment calls could be an opportunity to connect with other like-minded or like-situationed investors—but again, it depends on how a fund organizes its community. Access to other investors. Option #2 Do 50/50 angel investing and fund investing.
Typically a Series B financing event will raise $5 to $10 million for the company. million Series B financing round - this is the biggest Series B round I've seen in a long time. There is a ton of financing waiting for the right companies. So yes, even in this economy, venture capital financing IS readily available.
It was a great product addressing a large market opportunity and was interested in seeing how the AngelList syndicate process worked. I don''t know the reasons for selling, but presumably Authy felt their prospects weren''t promising as a standalone entity and may have had difficulty raising further financing.
Another example is Correlation Ventures ($300M+ AUM), a VC firm which co-invests in financings with at least one other new outside VC. Coinvestors need to figure out ways to prioritize themselves in a VC’s preference stack for syndicating opportunities. – Syndicate Special Purpose Vehicles (“SPVs”) for specific opportunities.
I spoke last week at the annual Cendana VC/LP conference. Of course they built protection into many of their financings that allows them downside protection against IPOs if the price is lower than the price they paid. And what many people don’t realize is that most syndicates get what is known as “deal-by-deal” carry.
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