Let’s start with defining what an angel syndicate is. So, an angel investment syndicate is a group of investors who pool their money to invest in startups. If you are here, you might have this question - how to build an angel syndicate. And, it’s very likely that the next question is - where to start?
Well, the good news is that a finance degree or a unicorn under your belt isn't mandatory for that. All you need is a clear strategy, a solid network, and the drive to back startups you believe in.
You should follow these 7 key steps of how to start angel syndicate and make it successful.
How to Build an Angel Syndicate
Step 1: Define Your Investment Focus and Strategy
Your syndicate should establish its core values before you start fundraising or present your pitch deck to anyone.
Does your syndicate have any interest in backing new fintech startups? Climate tech? Diverse founders? The defined focus helps investors eliminate unappealing deals while also seeking other members with compatible investment preferences.
Next, outline your strategy:
- At what phase will your syndicate invest in: pre-seed, seed funding or Series A?
- Your targets for the capital amount per investment deal need careful definition.
- The level of involvement you seek after investing into a venture requires clarification.
The work quality depends significantly on how clearly you define everything at this point.
Step 2: Build Your Network of Investors
A syndicate needs backers. Your primary task involves creating an investor group that trusts you enough to join your new investments. Try to build those relationships from your personal connections including mentors and colleagues. Your search for investors should continue until you succeed by using LinkedIn, meetings with investors, and engagement in alumni groups and startup communities.
Offer value up front. You should provide exclusive information or deals and updates about your company founders. Leadership success depends on the ability to deliver positive advantages and pleasant energy to people. The investors who join you in the beginning will prove the most beneficial to your marketing efforts.
Step 3: How to Structure the Syndicate
Most investors avoid this crucial next step which is perfectly normal.
You have two main options:
- DIY structure: Building your structure involves setting up business entities (SPV or LLC) while executing the paperwork yourself.
- Use a platform: Utilize a platform by choosing options such as AngelList, Assure or Allocate that manage legal aspects, compliance, KYC processing, and fund transfers.
The majority of new syndicate leads launch from a platform setup. Working with a platform provides speed and cost-efficiency along with the ability to dedicate time to finding excellent startup opportunities. Your syndicate needs to determine between open participation that allows members to join for each deal or closed participation that requires members to contribute capital before investing. Both have their pros and cons, so you should choose as per your needs.
Step 4: Sourcing and Vetting Deals
Your syndicate needs consistent access to promising startup opportunities to present its case. Your ability to discover profitable deals determines their availability for your syndicate.
Tap into:
- Demo days and pitch events
- Founder referrals
- Incubators and accelerators
- Cold outreach and inbound leads
Your thorough evaluation should be the first step when startups approach your syndicate. Perform checks on the founder's credentials, team cohesion, business development milestones, product alignment, market needs, and consumer market potential.
Integrate a review system that includes checklists or a structured evaluation procedure. Your investors will feel greater enthusiasm regarding your pitch when the offer terms are advantageous.
Step 5: Investment Criteria and Decision-Making
Every deal needs a green light. But what makes a deal worth doing? Create clear, documented investment criteria. These might include:
- Founders with prior exits or domain expertise
- A working product with early traction
- TAM (Total Addressable Market) above $1B
- Strong unit economics or early signs of it
Also, set up a decision-making framework. Will you make the final call as lead? Or vote with your backers? Transparency here avoids confusion and builds trust.
Step 6: Syndicate Operations and Support
Congratulations for successfully raising your first deal! Now comes the behind-the-scenes work.
Operations include:
- Managing subscription documents and investor wire transactions
- Communicating terms and timelines
- Filing legal paperwork
- Sending investor updates
Most of these operations are handled by platform services when you use their system. As the deal’s architect, you must both inform investors about company developments and support the founders’ needs. Share quarterly updates, connect founders with mentors, and keep the energy high.
Remember, strong operations = repeat investors.
Step 7: How to Manage Exits and Returns
Exits don’t happen overnight. But when they do, be ready. Keep clean records of who invested what and when. Monitor each startup’s progress, ask for cap table updates, and track valuation changes.
When there’s an acquisition or IPO:
- Communicate early and clearly
- Share expected timelines and returns
- Distribute funds accurately and promptly
A smooth exit builds credibility—and turns one-time investors into loyal backers.
Conclusion
Knowing how to start angel syndicate isn’t just about deals and dollars. The building of an angel syndicate depends on leadership skills to develop trust between members and form a fruitful community of investors. For any serious effort to launch an angel syndicate, follow the process. Define your focus. Build your tribe. Stay organized. Total faith in your startup investments stands as the most vital element.
Angel School is here to help you every step of the way. Join our Venture Fundamentals course to learn the basics of angel investing. Let’s build something legendary.
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