Ankit is Cofounder and CEO of A2D Ventures, whose mission is to build Southeast Asia's largest angel investing platform where visionary investors get access to co-invest and back tomorrow's game-changing startup founders.
Ankit has also held a leadership role in Shopee and is ex-McKinsey.
Guest Author: Ankit Upadhyay
Introduction
AngelList Syndicates are a pretty cool way for investors to pool resources and invest in startups collectively.
Essentially, they allow individual investors to back deals led by experienced angels, providing a unique blend of venture capital’s structured approach and angel investing’s flexibility.
Angels: The Individual Investors
Angels are individuals who invest their own money into startups. According to the SEC, angels must meet specific financial criteria to be considered ‘accredited investors.’
These investors often have personal motivations ranging from financial gain to supporting innovation and giving back to the community.
Good angels typically maintain a broad portfolio and take a passive role, offering help when requested rather than interfering with operations.
Ron Conway, a prominent Silicon Valley angel, exemplifies this approach. He invests in many startups without seeking control, demonstrating that a broad, diversified portfolio increases the likelihood of high returns.
The Concept of Syndicates
AngelList, a platform founded in San Francisco in 2010, enables the creation of syndicates where lead investors, or “super angels,” attract other investors to join deals under the same terms.
This system amplifies the investment power of individual angels, making them more attractive to startups. Similarly, A2D Ventures, an emerging platform in SE Asia, follows this successful model, empowering investors to participate in high-potential deals alongside experienced venture capital firms in the region.
How Syndicates Work
A lead investor, or syndicate lead, commits their own capital to a startup and invites others to invest alongside them. For instance, if a lead invests $10,000 and gathers 30 friends willing to invest the same amount, they can collectively offer $300,000.
In reality, only about 60% of committed funds are usually realized, but this still significantly boosts the lead’s investment capacity.
When a deal is identified, the syndicate lead negotiates terms with the startup and informs AngelList, which helps finalize the deal.
Participating investors review the deal and decide whether to join. Deals are typically live for 20-30 days, allowing time for due diligence and fund transfers.
How does the syndicate lead benefit?
Syndicate leads benefit in a couple of ways. First, they have more leverage to get into better deals because they have a lot more money behind them.
Second, they get a percentage of ‘carry’, which is the percentage of profits that will be paid to a lead after capital is returned to investors. Note that, unlike VCs, they do not receive any management fees.
Benefits and Challenges
For startups, syndicates simplify the cap table by reducing the number of individual investors to just two entries: the syndicate lead and an LLC representing all other investors. This approach minimizes administrative burdens and costs.
From an investor’s perspective, syndicates provide access to deals they might not find independently. Lead investors benefit from better deal flow and potential carry (profit share) from successful investments.
AngelList charges a flat fee of $8,000 per deal for managing the administrative aspects, with carry typically set at 20%, split between AngelList and the syndicate lead.
Similarly, A2D streamlines the investment process for Southeast Asian startups and investors, echoing AngelList’s approach by managing administrative tasks and offering competitive deal terms, the difference is A2D injects 10% capital as a syndicate lead and invites others to join in.
Syndicates offer a streamlined, efficient way for investors to back startups while providing startups with a consolidated investment structure.
The model leverages the strengths of individual angels with the collective power of syndicates, creating a win-win scenario for all parties involved.
Now for my plug of A2D Ventures
I am Ankit Upadhyay, Founder and CEO of A2D Ventures, which is one of the first productized angel syndicates as a platform in SE Asia. We source some of the best deals, co-investing with VC firms from around the region, and have already made a number of investments across Thailand, Indonesia, the Philippines, and Singapore.
Our vision is to bring the same type of syndicate success that investors have experienced for years on AngelList. And if we do that… it will be great not just for our investors but also for the startup ecosystem here.
If you’re interested in investing with us… please check out our site at www.a2dventures.com.
