This weekend, the Twittersphere and news cycle was dominated with the reactions of a number of VCs and angels to AngelList Syndicates. According to the data we’ve collected from AngelList, there has been an explosion of activity around Syndicates but early indications are that people could be setting the system up for even more to come.
Jason Calancanis thinks that Syndicates could fundamentally change venture capital going forward. Hunter Walk talked about the possible competition amongst angels as a result, and Fred Wilson explained that Syndicate leads need to be prepared to actually act as a lead investor after the round closes. Mark Suster drew out very balanced arguments “for and against” Syndicates. With all this chatter, we wanted to hear from AngelList on what the actual numbers and engagement look like.
For background, Syndicates allow any accredited investor on the AngelList fundraising platform to essentially create, lead and collect carry for a fund of angel money for a specific startup. Ahead of connecting with a startup, a syndicate can draw backers on AngelList, which are financing commitments in their network. Syndicates launched privately in August, but debuted to the broader accredited investor community last week.
Syndicates
So far, AngelList has seen 12 syndicated deals (half of these deals are still in progress). For these deals, $3.5 million has been raised in the first month. It’s important to note that this doesn’t represent all the capital that startups using syndicated deals have raised. For example, Shyp raised a $750,000 syndicate, and $2.1 million in total. Even of the non-syndicated portion of the $2.1 million, we’re told the vast majority, including from Hunter Walk and Satya Patel’s new fund Homebrew, came via AngelList. AngelList has seen 529 separate investments into those 12 deals, across 413 unique investors.
Backing
Co-founder of AngelList Naval Ravikant says that number of backers joining syndicates really increased over the weekend–in fact, the demand was overwhelming. He says 45 Syndicate leads have some backers for future deals (basically 45 mini-seed funds have been formed). Adding to this, 195 Angels have “activated” syndication, implying that they would accept backing, and there are now 484 unique backers on the site.
Backers can back Syndicate leads, even without a startup that the lead has committed to investing in. So far there has been $5.6 million committed to leads from backers. We’re told all of this capital is committed for each syndicate lead’s first deal (As a backer, you are committing an amount to every future deal made by the Syndicate Lead until you stop backing them). And almost all of this activity took place over the weekend.
These are early numbers but as Ravikant explains much of this activity, especially when it came to backer participation, came from the weekend. The number will become clearer when we see more deals being matched up between startups and Syndicate leads, and when we start seeing leads do multiple deals backing startups. It’s worth noting that it’s in the later numbers and engagement where we’ll see if Calacanis’, Wilson’s and Walk’s speculations will become a reality for the VC world.