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How to build and run an angel syndicate
We’ve worked with hundreds of angel syndicates. Based on their experience, we’ve compiled the following tips. They constitute what we believe to be "best practice".
Following this blueprint should help you to maximise your potential via Odin's platform, and optimise your performance in order to scale your activities as a solo capitalist.
Before you jump in and start syndicating deals, it is important you understand what you are doing. You need to have a solid grounding in the theory behind angel investing and venture capital. This takes time.
You should ensure you understand key venture capital investment principles like the power law, network effects and increasing returns to scale, as well as things like deal structures, share classes, fund economics and more. This will prevent you from making rookie mistakes.
It is also important that you test and iterate at smaller scale first, and build your own capabilities as an investor. The best way to get started is by joining an established syndicate and investing alongside them. You can also dabble via equity crowdfunding platforms like Crowdcube and Seedrs.
It is important that you don't try to be too many things to too many people.
Have a clear thesis around which sectors and stages you target, and which you don't. This will give you an edge, since:
- 1.You will see and get access to better deals. You'll become known as a "go-to" person for eg. gaming, or fintech, meaning you are more relevant to founders.
- 2.You'll grow your LP base faster As you build a network in your sector of focus, more relevant people will hear about you, and the people who join your syndicate will be more likely to invest with you. They'll also bring in more relevant deals, and improve your value-add to founders, since they'll also tend to have sector specific expertise and network.;
- 3.You'll get better at picking opportunities As you build a deeper understanding of the sectors that fit your thesis, your "nose" for good opportunities will improve. Investing is about saying "no" more than it is about saying "yes", so you need to know what you're investing in.
These three factors operate in a virtuous circle, with each one feeding the next.
Early stage investing is all about access. You build access through the quality of your network, and your reputation. Ultimately, people in venture invest in, and with, other people. The quality of the investor community you build, and the way you engage with them to build trust in your brand, is crucial:
- Tell people you know about what you're doing, and invite a small, selected group to participate with you and invest together.
- It's a good idea to keep your community small and tight-knit for the first year or so. Gate access, and keep quality high. This allows to build strong relationships with your members, and between them. This trust is necessary for people to invest with you. If they see that they are surrounded by smart people like them, their trust in you will grow.
- A casual chat tool that your community is familiar with is a great way to encourage conversations and deal sharing. WhatsApp and Slack are the two most obvious channels. Discord can also work.
- Email works best for running deals, because you can keep track
- Organising F2F meetups and dinners is the best way to build deep relationships and more trust. There is no substitute for IRL
- Create a simple website so that both founders and investors know who you are and what you do. I recommend Carrd or Notion for this. You can collect interest via a Typeform if you need to.
Getting access to good deals, as I've already said, is mainly a function of network and reputation. Venture is competitive, so you will have to fight for that access. Here's a few thing that will help:
Hustle. One of the things you will learn is that a lot of angel investors don't work very hard. It's worthwhile actively reaching out to founders you think look great, and just asking them about investing. You should also spend time networking with other investors...
Talk to other angels and VC's. They spend all day looking at investment opportunities. Figure out how you can actually help them, rather than just asking to see deals. If you build relationships and create value, they will reciprocate.
Build an assessment framework. Figure out what you are actually looking for in opportunities. If you've done your "learning" and "focusing" stages properly, you should have this nailed down.
Make fast decisions and be helpful to founders. Founders really appreciate this, and it will help with access on competitive deals.
🛠️ Tools & Resources:
- Airtable is a great simple CRM for deal flow. To be honest, it's the best tool to manage your syndicate in general. You can also use it to manage investors, run email marketing, etc.
- How to invest in startups by Sam Altman
- Alex Macdonald's angel investing toolkit.
- Twitter (and to a lesser extent Linkedin) are great ways to identify interesting founders.
- Agree an allocation with the founder. It's best to suggest a range.
- (Optional) run a webinar / AMA with the founder.
- Collect hard commitments from investors. Give them a clear deadline - ten days from the date of sharing is a decent rule of thumb. Chase by email / WhatsApp. Use a form with:
- Name
- Email
- Investment amount
- Is this a hard commitment? Yes/No
- If you're doing multi-currency deals with international investors (particularly in USD), get everyone to set up an account with Wise or Revolut before any deal goes live, and ask them to deposit funds there for their transfer. These platforms work for investors anywhere in the world, and will make their payments much faster to process, since they provide US banking infrastructure (ACH and ABA payments) for their USD transactions. They can be used by individuals and businesses. If investors wish to use their existing bank and transfer via SWIFT, transfers can take much longer (up to 2 weeks) to process, and intermediary banks often take transaction fees. This leads to grumpy founders and LPs
- Launch and collect funds via Odin Submit your deal to us. We'll get your entity ready and your deal page live in < 24 hours typically. This part of the process happens smoothly on our platform. We also take care of KYC / AML and compliance.
- Manually nudge people who are slow We send your investors automated reminders once they've added their email for a deal, but reminders work best coming from someone they know. When your deal is live, it’s your responsibility to follow up with investors regularly and chase them for their commitments.
- Let us handle closing / admin We take care of the paperwork and ensure everything is watertight when the deal closes. This allows you to focus on your relationships with LP's, and launching your next deal.
- Keep reporting simple The best way to handle reporting is to agree with the founder that updates will be shared directly with the underlying syndicate of investors, and then provide email addresses to them.
🛠️ Tools & Resources:
- Notion / Google docs for your deal memos (here's a template)
- Yet Another Mail Merge or MailerLite for email marketing
- Airtable / Google Forms & Sheets / Typeform to collect commitments
- Wise or Revolut for your LPs' payments
Like most things, time and consistency are the key to scaling your activities.
Focus on the quality, not quantity of deals. This is the best way to maintain your reputation over the long term. It will increase the likelihood of people transacting with you, and sharing information about you with their network. It will also improve your chances of getting access to capital from Odin's network.
Content Marketing
You can also seek to grow your brand and reach. The most effective strategies seem to be a Substack newsletter and / or a podcast. Multiple investors from Jason Calacanis and Harry Stebbings to Packy McCormick have leveraged content marketing to scale their brands as investors, and are now managing funds with tens or hundreds of millions in AUM.
Professionalising
At some point, it may make sense to shift from deal by deal investing (via syndicates) to managing a dedicated fund. We haven't launched a tech solution to this yet, but we will be very soon. In the mean time, we can point you in the direction of people who can help.