The Most Effective Way to Build and Grow Your Own Venture Syndicate

Josh

((00:00:03))

- Good day, fellow dealmakers. On today's show of the deal, Scout, we're going to talk about venture syndication. So, Jed, what the heck is venture syndication?

Jed

((00:00:13))

- Josh, nice to meet you. By way of background, I'm a self-taught venture investor. After leaving my world, the world of tech, as a tech operator. Okay, I've invested in some early stage companies and got a couple of successes. We've got a couple of unicorns in our portfolio. I wanted to scale up the impact of my investing and classically there are two paths. There is starting a fund, a traditional venture fund, or this obscure thing called a syndicate. And it was during the pandemic period when I was facing this conundrum, which immediately rules out a fund. So I went down the route of starting a syndicate. So the idea with the syndicate, it's really simple. Think of me as an intermediary in a way, a market maker between two sides of the venture ecosystem on one side, or startups that are looking for capital and on the other are investors in the network who are looking for deal flow so these people can find each other.

Jed

((00:01:15))

- Why the hell do they need a syndicate in the middle? to? Work with syndicates because we write bigger checks. The minimum viable check that a syndicate should be writing, in my view, is $100,000. And we've written as large as million dollar checks. So syndicates, generally speaking, sit in between the 4 or 5 figure checks and the seven figure checks right in that six figure spectrum. So it's one entity that you go to and unlocks a ton of investor relationships, and it gets you a chunk of capital if the deal checks out. On the other side, we serve investors. These are business angels to high net worth individuals and even up to family offices. They are looking at venture. Maybe they don't feel equipped to do this on their own. They might not have sources of deal flow, and they're and they're happy to work through a syndicate as a trusted intermediary to find deal flow to due diligence. And based on this, if they invest, they're very happy to pay a fee or a share of the upside in the form of carried interest.

Jed

((00:02:26))

- So that's the concept of it. Unfortunately, in execution, it often fails. The way people approach this is they go out and find a network of investors and they'll say, okay, I think these people will invest in deals and they go out to companies and they do what they think is diligence, and they pick a company that they think checks out. They put this stuff in a box, they shake it, and it's like electrons colliding. There's not a very precise way of doing it. And we set out to build out our own workflow, our own automations, our own systems and and ways to think about this, to optimize this vehicle. So I started this journey in 2020. We grew from literally 0 to 1300 LPs today. we know how to keep the investor community engaged, and that's a key part of this. So a few things that make us very successful. This approach of how we build and grow syndicates is highly, highly scalable. We know the growth mechanics such that today every single one of my LPs, the acquisition is 100% inbound.

Jed

((00:03:39))

- They come to us looking for deal flow. I don't go out pitching. We know how to scale this so that we know how to push deals out, nurture interest and close capital. And 95% of the time, it's a completely self-service process. And this is one of the failings of one of the trappings of an angel network model. It's very relationship based. You're in the capital markets, Josh, you understand how this works with people and relationships are very, very important. But every time you have a deal, if you've got to talk to people one by one, you hit a limit of scale. It doesn't work out. So how do you scale beyond that? We figured out the process and technology to do this. and we are hyper efficient at this because my tech spend on managing this network is $60 a month and I have no team. Which brings me to Angel school VC. This is my current venture. We do this as a way to give back to the venture ecosystem. To all the people who told me that I wouldn't be worth a damn as a venture capital investor.

Jed

((00:04:51))

- These are the people that I want to help. These are the people that I want to prove wrong. For all the people that want to get into venture and nobody give a chance. I teach a program to help them get in, and for the people that have some experience and to want to build and launch their own syndicates, we have the only program in the world for doing this. So in a way, what Angel school.vc is, is an accelerator for the capital side of venture ecosystems. We help angel investors go from writing the first check to leading syndicates as super angels. That's our mission and our contribution at this point as a bootstrapped entity with impact, that 2 or 300 investors from 30 different countries with no funding, and we continue to grow the community. So if anybody is interested in learning venture capital investing from the perspective of an angel investor or building in launching your own syndicate, and we're the only ones that help investors do this in the world. Categorically. Take out angel school VC.

Josh

((00:06:00))

- Angel school VC.

Josh

((00:06:01))

- It's pretty interesting. Now, as a part of your your your explanation, which I think you did a great job doing, you said most syndicates or angel groups do it like this. We go out, we find a potential deal. We we have potential investors, we put them together. And you said it's like like neutrons, like slamming into each other's electrons. Right. Exactly. All right. So how is yours? Different. And then one more time at the end. How could people go to find you?

Jed

((00:06:30))

- We are different because we have systematize every single part of the flow, right? We've taken everything down and broken it down to a science. Take, for example, how do you talk to an LP or a potential investor? How do you pitch them? We've got a script for this. We've got an FAQ list for resistance handling. How do you market deals? We've got that covered. Every single thing is covered. And just to recap, if you want to find more information where it was Angel School Week, I also have a Free Syndicate e-book if you want to download that from the website.

Josh

((00:07:08))

- Wow, cool. Jed, thanks for coming on the show, fellow dealmakers. As always, reach out to our guests and say thanks for being on the show. If you'd like to learn more about angel investing or maybe running your own syndicate, head on over to Angel school.vc to learn more. As always, reach out to our guests, say thank you, and if you have a deal that you'd like to talk about here on the show, the deal scout.com, fill out a quick form. Till then, we'll talk to you all on the next episode. Bye everyone.