Working with an AngelList syndicate is a great way to raise money and establish important connections for your company. But not every syndication is successful. Having syndicated 31 deals through our AngelList syndicate, Barbara Corcoran Venture Partners, I would like to share what I have learned about what makes some deals more successful than others. And by “more successful,” I mean that they have generated more interest from our community of backers and have therefore raised more money than other deals.
1. The first step is to identify the right syndicate for you.Even though a syndicate lead will be asking you a lot of questions to determine if he or she wishes to invest in and syndicate your company, you should also be interviewing them to make sure their syndicate is a good fit for you in order to optimize your odds of success. What makes a syndicate a “good fit” for you? Here are criteria to consider:
a. The syndicate is large enough to raise the amount you will be allocating to it. Keep in mind that backers are not obligated to invest--on average, syndicates raise 20%-40% of the aggregate committed amount for any one deal. Ask the syndicate lead how many backers they have, how much money is backing the syndicate and how much they have raised for other companies.
b. The syndicate has a portfolio of companies that may be good for you to network with. This is certainly not critical, but a nice benefit. We always look for synergies among our portfolio companies and opportunities for them to work together.
c. The syndicate is not dedicated to a certain theme or stage (e.g. “drones” or “pre-IPO”) that is not a fit for you.
d. The syndicate backers are well connected and can add value beyond money.
e. A syndicate lead with some knowledge of the industry you’re in.
f. A syndicate lead who will be a good representative of your company. Since the lead will be representing your company to the AngelList community, you want to feel comfortable that he or she will be a good ambassador.
g. A syndicate with a good track record. I suggest reviewing their portfolio of syndicated companies and speaking with the founders of some of those companies to ask if they were happy with the process and if the lead and backers have provided any value after the close. I also suggest asking the lead how many deals they have syndicated unsuccessfully (i.e. didn’t raise enough to close) and why he or she thinks they failed. Ideally, you’d like to work with a syndicate that has successfully syndicated deals for several companies and provides value after the close.
2. After you have a deal with a syndicate, it is important to make sure that your company’s AngelList profile page and deck are as compelling and thorough as possible.Provide as much information about your product, vision, KPIs, expansion plans, competition (and how you differentiate) and potential exit opportunities. This is a critical component to your success as syndicate backers will make their investment decision based primarily, and often exclusively, on the information contained on your profile page and in your deck. I realize that some companies are concerned about disclosing too much sensitive information in a semi-public forum (even when it will only be viewable by a select group of accredited investors). Work with your syndicate lead to determine a balance between providing enough information to optimize your raise and providing information that could be detrimental to the company if it got into the wrong (i.e. competitor’s) hands.
3. Immediately after the syndicate launch for your company, I suggest that you send an introductory message to all of the backers.In this message, you should introduce yourself, thank them for their support, share a few sentences about what your company does, provide some news about a recent positive development that is not included on the profile page or in the deck and encourage them to contact you directly with any questions. If you will be conducting a webinar for the backers as I suggest (see below), you should also invite them to attend the webinar and provide the day and time and a link to join.
4. I highly recommend that you run a webinar for the backers within a few days of the syndicate launch.We have had great success with this and thus require every company we syndicate to host a webinar for our backers. These typically last for one hour with the first half dedicated to a review of the deck and the second half to answering questions from the backers. Be sure to record the webinar so you can send the link to those backers who were unable to attend.
5. I suggest that you reach out to certain backers and followers, specifically, those who are undecided and who have opted-out.Try to provide them with additional information about the company or respond to their concerns in order to enable them to make a more informed judgment about investing. Also, immediately respond to all backers who ask questions. I also suggest sending the link to your webinar recording to all backers who did not attend the webinar.
6. After the syndicate round has closed, you will benefit from sending backers consistent monthly investor reports containing a reasonable level of detail, including KPIs, product updates, expansion plans, new hires, etc.I also strongly recommend that you include requests for assistance from the backers. This could include requests for introductions to potential customers and new hires. You should also consider reaching out to directly the syndicate lead and to certain backers, especially when they have experience in the area you in which you need help.
7. Always respond to questions or comments or offers to help from backers.Doing so may not always seem like a good use of your time, but I assure you that strengthening your relationships with backers will pay off in the long run.
I hope you find this information helpful. If you believe that Barbara Corcoran Venture Partners may be a good syndicate for you, feel free to message me on AngelList or LinkedIn.
Phil Nadel is the Co-Founder and Managing Director of Barbara Corcoran Venture Partners, one of the largest and most active AngelList syndicates.