Syndicates on AngelList
To me this idea is just under the umbrella that has been growing over the past few years called crowd funding. We first witnessed that with Kickstarter and then other platforms followed to participate and invest in someones creative project. Then we saw Crowdrise where we can give money to a cause. There is even Give Forward where the crowd can give towards medical bills. CircleUp where the crowd can back and own a piece of consumer product companies. Fundrise is another one that lets you invest directly in real estate deals. Need I go on?
What is interesting is that it isn't so much a change in consumer behavior but the ability for consumers who do not have access to these interests and opportunities to be able to participate.
I have built my own personal syndicate around the deals that I do. Each of the people I send deals to are people who I respect and look at the concepts differently than I do which is great. Over the past few years I have seen the shift in capital. There are more people out there at a younger age who are interested in taking their earned capital and putting it back into businesses that they understand. We are living in a time that because of technology there are countless businesses being built to change each industry. There are not only countless angels with deep pockets there are micro-VC's who have funds that can put in $150/200K at the onset where VC's want to participate with a much bigger check. VC's have huge amounts of capital raised that they need to put to work and as businesses cost less and less to launch and scale the VC community is willing to wait a longer time to put cash in because they need to put all that cash to work. In essence, the investment industry is changing in regards to where entrepreneurs raise their cash.
I was not going to do a syndicate on Angels List but changed my mind to do it and in the end decided against it. I wanted to see how it works and am interested in pulling in other like minded investors in to deals that I believe in. Yet what I would essentially be doing is building my own fund and I would rather have others get excited about particular deals like the personal syndicate I have. They can choose to opt in or not. It is not so different than crowd funding. If the crowd likes it (my syndicate) then it ends up getting funded. That is how I want angels list to work.
What I like about the syndicate is that there are many accredited investors out there who could be investing in start-ups but aren't quite ready to put in the amount needed and through angels list it gives them the ability to test the waters. It brings a larger group of people to the table for a deal. New investors first get to piggy back on others they believe to be educated investors. This helps the entrepreneur. In essence it is the democratization of capital.
Our lives are changing through these platforms but they need to be built and grow without the insular early adapters community in mind but a much broader reach. The merging of crowd funding and social media and everyone becoming their own brand is creating consumerization around the world and I am looking forward to more of these platforms getting to that big stage.