MA7, the new syndicate co-led by Murat Abdrakhmanov and Yelzhan Kushekbayev, is making waves in Kazakhstan’s venture capital ecosystem. While Murat is recognized as the country's most prominent angel investor, Yelzhan brings extensive experience, having personally invested in 90 SPVs since 2020. Together, they’ve launched the MA7 Angels Club, a syndicate leveraging Murat’s deal flow to give individual investors exposure to high-growth opportunities. 

The Birth of MA7 

Yelzhan and Murat met through Astana Hub, a government institute that supports the growth of Kazakhstan’s tech and IT ecosystem. Murat, a mentor in the Hub’s first angel investor cohort, saw potential in Yelzhan and invited him to partner in creating MA7. With Murat’s track record of a combined portfolio that includes over 50 companies and 12 exits, the duo set out to develop a syndicate in Kazakhstan that emphasizes meaningful, transparent interactions with investors. 

Investment Strategy and Notable Deals 

MA7 focuses on sectors they understand and have deep expertise in—primarily B2B SaaS, fintech, edtech, hrtech, deeptech, and AI. Avoiding industries like biotech or agriculture tech, they instead invest in promising startups like Hero’s Journey, a Kazakhstan-originated, US-based fitness company. Hero’s Journey has created a revolutionary gamified gym experience that uses (automation and IoT) to optimize customer engagement and revenue per square meter. MA7 raised $1mil in a $6 million seed round to support Hero’s Journey’s expansion into New York.

Another recent investment is Zibra AI, a platform that transforms text into 3D objects for game development. Murat had already invested personally in the company before Andreessen Horowitz backed it. When the next round came up, Murat and Yelzhan brought in their MA7 syndicate members, giving them a chance to back a leader in AI-driven game design. The syndicate members quickly jumped at the opportunity to participate in the round.

One unique aspect of MA7’s strategy is the commitment Murat and Yelzhan have made to each deal. While many syndicate organizers often contribute as little as 10% or less of the allocation, MA7 aims to put 30-50% of their own capital into each investment. This higher level of personal investment ensures alignment with their investors and strengthens the trust within their community.

Why Sydecar? 

From the outset, MA7 chose Sydecar to manage their syndicate operations because of the platform’s flexibility and user-friendly interface. Yelzhan also emphasized the importance of Sydecar’s due diligence and KYC process. Kazakhstan’s geographical proximity to Russia adds complexity for investors, and Sydecar’s team has been diligent in ensuring compliance while also accommodating the specific needs of MA7’s investor base.

Building a Community 

One of the standout features of MA7’s syndicate is its tight-knit investor base. With 80+ investors, all of whom are friends or direct referrals, MA7 is committed to building meaningful relationships. Deal presentations take place where founders pitch directly to the syndicate’s investors, followed by detailed analysis sessions with the investors where Yelzhan and Murat break down the investment thesis, risks, and benefits. This approach fosters transparency and trust, ensuring their investors understand the full scope of each opportunity and feel confident in their investments.

MA7 also occasionally hosts offline gatherings, including venture-focused regattas and apres ski events across the globe. These events combine networking with educational sessions on venture capital, further strengthening the community.

The Road Ahead 

In the coming year, MA7 aims to invest $10 million across 15 deals and grow their investor base to 300. While they’ve grown their syndicate through word-of-mouth, they’re now planning to launch a public website and engage in more formal marketing activities.

With the support of Sydecar’s platform, Murat and Yelzhan are well-positioned to scale their operations, expand their investor base, and continue sourcing top-tier deals from Kazakhstan, central Eurasia, and beyond. Sydecar streamlines everything from investor management to deal tracking and communications, helping syndicates like MA7 operate with precision and efficiency. Learn more about how Sydecar’s Syndicate platform can enhance your syndicate operations by visiting our Syndicate page.

Gabriel Jarrosson, a seasoned venture capitalist and founder of one of the largest French angel syndicates, has been navigating the complexities of syndicate management since 2017. With over 750 active angel investors and a community of over forty thousand on social media, Gabriel has built a significant presence in both France and Silicon Valley. His syndicate, Leonis.vc, invests primarily in YC companies. He is also the Managing Partner of a fund, Lobster Capital.

In the early days of his syndicate, Gabriel struggled with the inefficiencies of managing French SPVs, describing the experience as nothing short of “horrible.” Seeking a better solution, he transitioned to using Assure’s Glassboard product for his syndicates. However, when Assure shut down, Gabriel needed a reliable alternative. Two years ago, he discovered Sydecar.

Unified Communication and Operations

Running a large syndicate requires efficient communication and operational tools. Sydecar’s Syndicate platform provides Gabriel with the capability to manage all investor communications, from creating posts and sending updates to handling investment memos—all directly within the platform. The platform’s design offers the control and customization needed to engage investors more effectively.

Keeping LP Information Private

Gabriel’s primary motivation for choosing Sydecar as his syndicate platform was the platform's commitment to privacy and control. Unlike other platforms, where LPs might receive deal offers from multiple syndicate leads, Sydecar ensures that Gabriel's investors see only his deals.

Moving Forward

Looking to the future, Gabriel sees Sydecar as more than just a tool—it’s a platform that evolves with his needs. As he prepares for his next fund, Sydecar’s continued innovation ensures that Gabriel can stay ahead of the curve and keep his investors engaged.

Gabriel’s success with Sydecar showcases the power of an all-in-one platform to transform syndicate management. If you’re interested in seeing how Sydecar can streamline your syndicate operations, check out our interactive demo. The demo offers a step-by-step guide on how easy it is to set up a syndicate on our platform. 

Michele Schueli, GP at ARMYN Capital, stands out in the venture capital space for his strategic focus on secondary transactions. With a keen eye for identifying market dislocations, Michele has successfully navigated the turbulence of recent years, turning undervalued assets into profitable opportunities. His approach to secondary investments reflects a blend of opportunism, market insight, and a deep understanding of the evolving needs of LPs.

Opportunity in Market Dislocations

Michele's interest in secondary transactions began in 2019 and persisted even through the market turbulence of 2022 and 2023. In fact, as valuations of high-quality companies fluctuated dramatically, Michele identified opportunities where solid companies were trading at significant discounts. 

Michele's strategy at ARMYN Capital also includes facilitating liquidity for LPs through carefully timed transactions. By helping LPs find buyers when the right opportunity arises, Michele ensures that his LPs can capitalize on market conditions without being locked into long-term positions. Michele highlighted that some of the most coveted names in the market are only accessible through secondary transactions.

Evaluating Secondary Deals

When assessing secondary deals, Michele breaks them down into two categories: highly sought-after tender offers in companies such as Stripe, and companies that are temporarily mispriced due to market conditions due to individual sellers seeking liquidity. For the high-demand names, the focus is on securing access. However, for mispriced opportunities, ARMYN relies heavily on financial data and their knowledge of the company. 

Michele also emphasizes the importance of understanding the preference stack when dealing with secondary transactions; it's crucial to know where that stock sits in the stack. This can significantly impact the investment's risk and return profile.

Sydecar’s Role in Secondary Transactions

Sydecar’s platform has been a game-changer for ARMYN Capital when it comes to handling secondary transactions. One feature that stands out is Sydecar’s easy-to-use pooling system, which makes gathering and managing funds from multiple investors a breeze. This has saved Michele a lot of time and allowed him to focus on finding the right deals instead of worrying about the logistics.

With Sydecar, Michele has been able to scale ARMYN Capital’s secondary strategy, making the process faster and more reliable. The platform’s efficiency has become a key part of ARMYN’s success, helping Michele stay competitive in a fast-moving market.

Looking Ahead

As the venture capital market continues to evolve, Michele believes that secondary transactions will remain a vital part of ARMYN’s investment strategy, particularly in the absence of a robust IPO market. 

Michele anticipates that the trend of secondary transactions will persist, driven by the need for liquidity and the maturation of private companies that might have otherwise gone public in different market conditions. He believes that the role of secondaries is only going to grow, especially as more companies embrace tender offers as a viable alternative to IPOs. 

If you're inspired by Michele’s approach, check out how you can streamline your own secondary transactions with our interactive product demo. With our interactive demo, you’ll get a step-by-step walkthrough of how to create a deal on our platform. Whether you're a seasoned manager or new to secondary deals, this demo will show you how easy Sydecar makes the process.

A Vision for a New Investment Landscape

PariPassu, a members-only co-investment network launched by Pari Passu Venture Partners (PPVP), brings together a curated community of founders, operators, and tech enthusiasts to invest in leading Seed/Series A stage startups spanning eCommerce tech, SaaS, and consumer tech. Led by Insight-alum Julia Gudish Krieger, PPVP was built with founding partners and fellow operator-investors Kyle Widrick (founder of Win Brands Group) and Dylan Whitman (founder of Inveterate). PPVP aims to give industry insiders access to high-impact investments alongside top global venture capital firms and to be an engine for value-add that helps startups succeed. The early-stage venture firm has backed 22 companies to date, including Siena AI, Daasity, Function Health, and Mantle. PPVP’s co-investors include Sequoia, Upfront, 8VC, and Sierra Ventures.

The recent launch of their private investor app, PariPassu, amplifies PPVP’s mission, granting approved, accredited investors access to highly competitive investment opportunities on a deal-by-deal basis. The new app is designed intentionally to give members the ability to discover new opportunities, seamlessly track their investments, and support their portfolios all from the palm of their hand.

Breaking Barriers in VC

For many startups, the journey to success is marked with challenges that require more than just financial backing. Access to a powerful network of value-add operators—individuals who have hands-on experience in building and navigating companies—is imperative. However, such networks are not accessible to all.

Similarly, for operators and tech enthusiasts who wish to invest in startups, the barriers to entry in traditional venture capital are high. Typically, venture capital investments require a substantial financial commitment (often a $50K+ minimum), and gaining access to top-tier deal flow in competitive venture rounds requires deep-rooted relationships in the venture ecosystem. Many angel investors who prefer the flexibility of deal-by-deal investing find it difficult to identify high-quality, curated opportunities amidst a sea of mass-market crowdfunding sites and marketplaces.

A New Co-Investment Platform

Enter PariPassu, a private investor network and mobile app designed to democratize venture capital investment. PariPassu provides its members—accredited and approved industry operator-angels—with the opportunity to co-invest in category-defining startups alongside experienced venture capitalists, starting with as little as a $10K check.

Leveraging PPVP's extensive network and expertise in commerce enablement, SaaS, and consumer tech, PariPassu sources highly curated, often oversubscribed investment opportunities. The platform’s intuitive interface allows members to access deals in real time, invest with a lower entry point, engage with founders to provide support, and receive portfolio updates—all from the convenience of a mobile app. This approach enables individual founders and tech enthusiasts, who have traditionally been left out of venture capital investing, to join a supportive community. This community aids the next generation of startups, providing the support these companies often need to succeed.

Key Success Factors

• Founder-Led Approach: The founder-led, founder-backed ethos of PPVP underpins the entire PariPassu platform, creating a sense of community and trust among members.

• Curated Value-Add Network: PariPassu's community consists of some of the most high-profile leaders in commerce and tech, supercharging the value-add on cap tables. Many of the founders backed by PariPassu invest alongside the community in future rounds. 

• Investment Expertise: With a track record of creating over $200M of enterprise value and allocating hundreds of millions in capital, PPVP's team brings members access to highly competitive deals while still empowering angels with the flexibility to make their own investment decisions.

• Accessibility: By lowering the barrier to entry to venture capital investment and using SPVs, PariPassu makes it possible for founders, operators, and other angels to participate in backing the leading technology companies of the future. 

Streamlining the Investment Process

While SPVs offer significant flexibility to PariPassu’s network of investors, they can also be administratively burdensome. This is where Sydecar steps in. Sydecar handles the bulk of SPV back-end processes, from creating the investment entities and associated bank accounts, to handling K-1s for investors in the case of taxable events. This allows PariPassu to focus on meeting with founders and building their community of value-add investors. Since switching to Sydecar, PariPassu has closed 13 SPVs, benefitting from Sydecar’s streamlined product and quick, responsive customer support.

The Next Era of Venture Investing

PariPassu is on a mission to build the most powerful ecosystem of operator-investors and collectively back best-in-class companies. Their platform represents a paradigm shift in venture investing, democratizing access to the highest-caliber dealflow and empowering accredited investors to participate in the growth of innovative startups by co-investing with leading VCs. With its founder-led approach, curated network, and top-tier investment opportunities, PariPassu bolsters value-add on cap tables and supports the next generation of disruptive entrepreneurs.

If you're an accredited investor, download the ‘PariPassu’ app to receive access to PariPassu’s dealflow here.

Successful venture capitalists don’t always begin in the industry. Earnest Sweat, self-made venture capitalist and co-host of the podcast "Swimming with Allocators," is a prime example of this. His journey from investment banking to entrepreneurship and finally to venture capital shows how different experiences can shape a unique approach to investing.

Earnest's career began in the 2007 financial crisis, a period that grounded his investment approach. As an equity research analyst at BMO Capital Markets specializing in Real Estate Investment Trusts (REITs), he mastered data analysis, clear communication with asset manager customers and Fortune 500 CEOs, and learned how to defend an investment thesis.

"As an equity research analyst, writing was a big part of my job. I had to confidently share my investment thesis with the world, fully aware it could be proven wrong in the short term. That experience taught me resilience, a quality I still rely on today."

Earnest’s shift to entrepreneurship was both challenging and enlightening. He was drawn to the way people build networks and set out to create MERIT, Inc., a marketplace for connecting individuals with their ideal mentors. Despite facing the common hurdles of a first-time founder and navigating the lengthy sales cycles of working with municipalities and universities, his passion for entrepreneurship remained.

This drive led Earnest to business school, where he discovered his true calling in venture capital. During an MBA internship in India for a VC, he assessed and invested in tech companies, transitioning from analysis to hands-on action.

“Venture capital is the better version of equity research because I'm getting to make bets–it's not just a recommendation. I'm actually putting skin in the game.”

Once an investor, Earnest’s diverse background laid the foundation for his unique investing thesis. Initially focusing on real estate technology (“prop tech”) through his job with Prologis Ventures, he expanded his outlook to Vertical SaaS which included industries such as commercial real estate, construction, supply chain, logistics, commerce, and retail. This flexible perspective helped him identify key challenges across industries, such as outdated technology, the need for transparency, and labor market complexities. Recognizing these universal challenges, Earnest developed a strong thesis around how product types such as applied AI, marketplaces, middleware, and vertical software can enhance value chains in all industries.

To add structure to this thesis, Earnest has defined three archetypes for what makes a successful founder:

The Humble Outsider: Picture the classic tech expert from Silicon Valley. They spot a problem in a specific industry and dive deep to understand every part of it, surrounding themselves with knowledgeable industry insiders to get the full picture.

The Innovative Insider: This is someone who's been in the industry for years and knows it like the back of their hand. They recognize the need for technology and can clearly define their ultimate goal, drawing in tech talent to create innovative solutions. They balance their deep industry knowledge with a vision for the future.

The Bridge: These are individuals with personal ties to an industry, maybe through family or their upbringing. They blend this insider perspective with a strong technical background from studying engineering. (Earnest is noticing more people like this looking to become entrepreneurs.)

Earnest's background and commitment to consistently learning isn't just the foundation of his investment thesis; it's also what makes him a standout venture capitalist. He's known for providing real value to founders, often connecting them with potential customers or other valuable contacts before making any investment. When considering an investment, Earnest goes deep, understanding the startup's target customers and then introducing the founders to two or three potential leads within his network. Thanks to his extensive connections, he can open doors to new opportunities.

“It's a win, win, win. I get unfiltered feedback, the founder has an opportunity to present their product, and my contact might become a future customer. I’ve seen this as a differentiator for me.”

Everyone’s path to venture capital is shaped by their individual experiences and perspectives. Earnest's journey demonstrates that embracing your unique journey can be your greatest asset in venture capital. He emphasizes the importance of authenticity and self-belief.

"A lot of times you have to trust your own narrative and be the best version of yourself.”

Sydecar has supported Earnest by streamlining his investment process with our SPV product, and we're ready to do the same for you. If, like Earnest, you're breaking into venture capital from a non-traditional starting point, schedule a demo with Sydecar today and let us help you start your VC journey.

Meet Jesse Bloom, Partner at SaaS Ventures. After beginning his career as a financial advisor, Jesse got his start in VC through a series of internships while getting his MBA from NYU. In August of 2022, Jesse joined SaaS Ventures as a Partner, leading their growth investing practice. Read on to learn about the complexities of investing in growth-stage companies and how SaaS Ventures uses SPVs to gain access to desirable rounds. Jesse also shares the secret behind building NewbieVCs, an online and IRL community that fosters connections and supports emerging talent in the venture capital space.

Sydecar (SC): What do you do at SaaS Ventures?
Jesse Bloom (JB): I lead the growth investing practice at SaaS Ventures. We have two teams: an early-stage team that invests in pre-seed through seed and a growth team that invests in Series B through Series D. SaaS Growth invests particularly in oversubscribed rounds, where access is typically limited to only the lead investor and existing investors with legal pro-rata rights. We partner with these existing investors, providing them with the capital they need to fill their pro-rata allocations. 

 
SC: What was your path into venture and how did you end up at SaaS Ventures?
JB: I started as a financial advisor at Morgan Stanley after college. Three years later, I pursued my MBA at NYU and interned at a venture fund called Alpha Partners, where I gained experience sourcing investments and performing due diligence on later-stage companies. After two years, I joined SaaS Ventures as a Partner to lead a new growth fund. Within 15 months at SaaS, we have successfully raised the fund and made two investments of which I am incredibly proud. 

SC: What challenges have you noticed in investing across both early and late-stage companies?
JB: In my experience, the most difficult part of early-stage investing is having to be selective about which founders to invest in, because you want to support them all, but that’s just not feasible. On the growth side, it can be complicated to gain access to the types of deals that I want to invest in, which are oversubscribed Series B through Series D rounds, led by one of about 25 funds that we consider to be top-tier. Speed is of utmost importance here; there were only 6 of these rounds reported in all of Q4 2023, and once they have been reported, it’s already too late to participate.

Sydecar was key in overcoming these growth-stage challenges in our most recent investment. We set up an SPV, signed a carry-share agreement, funded it, and wired to the company all within 72 hours. This speed was crucial because top-tier pro-rata decisions often need to be made in hours, not days, and we can’t afford to spend a week setting up an SPV. We need to have the capital and infrastructure ready to seize that fleeting opportunity. Without Sydecar, making this investment might not have been possible.

SC: What is your approach to network building?
JB: The bulk of a typical VC's job is to know every founder in their domain. However, my full-time job is getting to know every investor. My networking involves recurring meetings with investors and attending as many VC events as my schedule allows. I also started a group called NewbieVCs which brings newly minted investors together to collaborate, network, and navigate the world of venture capital together. 25 of us are attending the 3rd Annual NewbieVC Ski Trip in January! Throughout all of this, I emphasize being friendly and not overly transactional, hoping my business will grow proportionate to the number of investors who like me and know what I do. I’m also very clear on the type of deals I’m looking to participate in. Picking a niche is essential to stand out, and hopefully, my network knows exactly what I'm seeking.

SC: What role do SPVs play in your investing strategy? 
JB: Our firm invests almost exclusively through SPVs because we theoretically exercise pro-rata rights on behalf of other funds. For the legal pro-rata owner to be represented on the cap table, we have to set up the SPV as an affiliate of the fund with the pro-rata right. This ensures genuine pro-rata execution and avoids adding complexity to the cap table. Our goal is to gain access to otherwise closed opportunities by supporting insiders who have earned valuable pro-rata rights but can’t fill them. The only method I know to achieve this swiftly and effectively is through SPVs. 

SC: Do you ever use the SPV to bring in co-investors to the round? 
JB: Absolutely. If our pro-rata source has more allocation than we can fill and they are okay with bringing in co-investors, we offer up additional allocation to our LP base. We often extend these opportunities to a small group of prospective LPs as well to demonstrate the quality of our deal flow.  

SC: What does your LP base look like? What is unique about them? 
JB: Our LP base is made up primarily of family offices and high-net-worth individuals. They understand that the dynamics of venture are such that only the top firms typically get access to the best deals at the most favorable prices, especially at Series B, C, and D. The leading companies at these stages have the strongest traction, metrics, and teams, and therefore only want top-tier investors. Our LPs know that if they cannot invest directly in the top-tier funds, their next best move is to invest in the rounds these funds are leading to get a sample of their outperformance.

SC: It sounds like understanding LP preferences is important. Do you have any tools or processes besides Sydecar that are essential to your process?
JB: My CRM, Affinity, helps me manage relationships with LPs who provide insights into ongoing deals. It's indispensable in understanding the dynamics of my network. PitchBook is another essential tool because it gives me access to cap table details, enabling me to identify potential fund partners. Affinity then comes back into play, helping me discern which of these cap table contacts our team knows best, giving us a strategic advantage. If we secure the deal, Sydecar becomes the go-to for subsequent closing.

SC: Tell us more about NewbieVCs and the inspiration behind it. 
JB: NewbieVCs is primarily a Slack group where we exchange information, plan events, and talk about investments. I created it back in 2021 because venture newcomers expect training and guidance that partners and more experienced VCs rarely provide. So, I built a small community of ‘Newbies’ as a type of support group for VCs who have just joined the industry to make friends and learn the job. We're a tight group of 200 active members, and it's played a big role in my career. I found my job at SaaS Ventures through a Newbie, and some Newbies have been funded by others to start their own companies! It's a unique community with a ton of up-and-coming all-stars.

Jesse’s quick rise to Partner at SaaS Ventures shows how ambition can meet opportunity in the venture world. Launching SPVs with Sydecar's help, he quickly capitalized on important investment opportunities, while at the same time starting NewbieVCs, promoting knowledge sharing and networking in the venture community. His experience is a lesson for new investors: success comes from using efficient tools, building strong networks, and constantly learning.

To learn more about how Sydecar supports venture capitalists like Jesse, you can find additional information about SPVs on our website, here.

After decades of investing in startups almost exclusively through fund managers, more family offices are choosing to go direct with their investments, drawn by the control and outsized returns and empowered by a new generation taking the reigns.

A family office is an organization that manages financial assets for a wealthy family (or multiple families, in the case of a multi-family office). Its role is to ensure that the family’s wealth is managed, preserved, and grown for future generations. Given their goal of increasing wealth for future generations, family offices tend to be more comfortable with high-risk and long-term investment horizons. According to a study by Goldman Sachs, family offices allocate approximately 45% of their portfolio to private equity on average. A UBS survey shows 74% of families are likely to increase their allocation to private equity as they believe these investments will continue to outperform public equities.

Historically, family offices have gained access to private assets through funds, rather than direct investments. Notably, this gives them exposure to a wider variety of assets so as to hedge the risk involved and build a truly diversified portfolio. As venture capital has proven to be an increasingly lucrative asset class over the past decade, family offices have become a popular source of LP dollars for venture funds. Investing through a fund allows a family to diversify their startup exposure, access high-quality deal flow, outsource the cumbersome process of due diligence, and save time on deal execution. Outsourcing deal flow and due diligence are key, as many family offices lack the expertise needed to effectively evaluate an early-stage company. Instead, they look to emerging fund managers, who spend their time deep in the weeds of company picking, to provide access to a high-quality basket of startup assets. Family offices and emerging fund managers are a match made in heaven, as newer managers appreciate the lower diligence threshold that family offices have as compared to institutional LPs. 

“Syndicates play a critical role in showcasing how certain managers communicate about deals. The most savvy VC managers are showcasing deals that they are syndicating, along with whatever terms they have, to prospective LPs. It helps LPs understand how they think, which is especially helpful for family offices that are thinking about going direct. It helps them start to understand what a good deal looks like, what type of traction and growth investors are looking for at each stage.” - Dave Sachse, Sachse Family Fund

In recent years, family offices have displayed a growing appetite for more direct exposure to startups. Each year, family offices as a whole have increased direct startup investments, as evidenced in First Republic Bank’s report from 2022. Family offices will often invest alongside funds to increase exposure to a certain company and as an opportunity to build their own deal flow. This trend is fueled by the younger generation’s influence, the market downturn, and new economic advantages. 

“The vast majority (72%) of those surveyed invest in established venture funds, 84% invest in emerging venture funds (which include Fund II and Fund 3) and 81% percent invest in first-time funds — a jump from over 75% last year.” - First Republic’s Family Office Survey Report 2022

The next generation of investors brings new strategies

The first wave of family offices included the likes of JP Morgan and JD Rockefeller in the 1830s, but the family office model wasn't popularized until the late 20th century. Over the past few decades, the number of family offices has grown to track with the record number of Ultra High Net Worth Individuals (UHNWIs) in the US. Unless they were in a tech ecosystem or made their wealth from the Dot-com boom, this generation of family offices was less interested in venture investments, instead focusing on familiar investments or the industry where they made their wealth. However, as millennials become more involved with their family’s wealth management, venture capital is becoming an increasingly appealing asset class. This generation is not only more comfortable with risk, but they are also able to leverage their knowledge as digital natives when evaluating opportunities. They’re better suited to seek out deal flow, perform diligence on early-stage startups, and get in the weeds with portfolio companies. Their lived experience generally allows them to make direct investments with more confidence. 

“A lot of gen ones want to hold on to how they made their original wealth — maybe it’s real estate or manufacturing or retail. That’s all they know. But eventually, the generational wealth transfer is going to happen. I see venture becoming more and more prevalent because our generation grew up with technology. We’re going to gravitate towards it more and we’re going to see more and more family offices getting into the game in the next decade.” - Dave Sachse, Sachse Family Fund

The rise of value-driven investing is also incentivizing more family office involvement in VC. Across the board, investors want to be more connected to the startups they are investing in. Family offices are more interested in funds that invest in diverse founders or impactful causes, but an even better way for family offices to control investing in their values is through direct investment.

Downturn makes startup investing more palatable

Family offices have a reputation for being bureaucratic, slow, and approaching venture investing with the same heavy-diligence lens as they do with other investments, causing them to miss out on the fast-moving, high-valuation rounds from the past few years.  They tend to have smaller teams that approach early-stage investing through a broader private equity lens, meaning they take more time to do the calculations on a company’s cash flow, growth, and exit potential and will care more about a reasonable valuation deal. 

With the economic downturn, the venture ecosystem has adjusted to slower fundraising timelines, more reasonable valuations, and alternative sources of capital outside of traditional VCs. These factors have made venture investing more palatable for family offices.

On the startup side, founders are looking toward sources of funding other than institutional VC funds as fundraising is now harder. They are more inclined to seek out family offices, syndicates, and other funding options to participate in their rounds.

Economic Advantages

Family offices were never uninterested in direct investing. In fact, several believe that direct opportunities are where they can find truly outsized returns. However, they haven’t focused on direct investing because of the back-office operations required. They were willing to rely on VC firms to handle the legal and accounting work for each investment because of the time and cost involved.

“Family offices can benefit from partnering with emerging managers who bring a fresh perspective, specialized expertise, and access to unique investment opportunities. By partnering with emerging managers, family offices can diversify their portfolios and achieve higher returns while also supporting the growth of emerging businesses.” - Leesa Soulodre, R3I CAPITAL

Today, as back-office technology improves, deals can be done quicker and cheaper. What used to take months of legal fees and a team of accountants on retainer can now be spun up in a few hours for a fraction of the cost. Direct investing also allows family offices to put more of their capital to work without sacrificing carry and management fees. Platforms like Sydecar are powering family offices by managing back-office functions like legal, banking, and accounting using standards-driven software. With the lowered transaction costs and admin time required, family offices can spend more of their time focusing on deal sourcing and diligence, and get greater exposure to the opportunities that excite them.

As the next generation steps up to managing the investments, the downturn allows family offices to get involved, and the burden of executing investments is lowered, family offices are increasingly able to act as their own VC fund and invest directly into startups.

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Learn more about how family offices partner with Sydecar to run SPVs.

In the dynamic world of startups, securing the right type of funding at the right time can often be a make-or-break moment. For Unplex, the decision to opt for an angel round was a strategic choice. In this article, we delve into Unplex's journey and explore its decision to use a founder-led SPV to leverage its network and efficiently raise capital from over 20 angel investors. 

First, some background on the company: Unplex is pioneering a financial revolution that envisions a planet where money knows no borders. With a mission to simplify and democratize global transactions, Unplex is redefining the way we send money, making international money transfers as effortless as sending a text message. Say goodbye to cumbersome bank account numbers and the hassle of navigating multiple apps. 

Why Choose an Angel Round?

In February 2023, six months after launching their company, the Unplex team set out to raise an angel round to extend their runway. It became clear that an angel round was the right fit for the company when they considered the community they were building their solution for. During their research phase, they noticed a significant level of interest among potential investors. What's more, they recognized the added value that angel investors could bring, particularly those with relevant contacts or experience, who could also serve as advisors with a vested interest in the company's success. With this information in their back pocket, the founders of Unplex kicked off their own fundraise using a founder-led SPV on Sydecar. 

Kick off the Fundraise

The Unplex team kicked off their angel round by gauging interest and determining an appropriate valuation for the company. To gauge interest, they reached out to their network of friends and acquaintances. The response was overwhelmingly positive, further fueling their confidence in pursuing angel funding.

Valuation, a crucial aspect of any funding round, was established through meticulous research. The team studied similar companies and funding rounds on platforms like Crunchbase and engaged in discussions with a select group of advisors. This comprehensive approach helped them arrive at a valuation that was both fair and competitive.

Leveraging the Power of Network

For Unplex, the network the founders had built played a pivotal role in the success of their angel round. The three co-founders harnessed the power of their individual networks, reaching out to friends and connections. They organized a single product demo and angel investment day, where they presented their pitch, provided a product demonstration, and fielded questions from potential investors. This strategic move not only streamlined the investor outreach process but also generated a sense of FOMO that allowed them to close the round within an impressive three-week timeframe.

Demo days were instrumental in Unplex's fundraising strategy to share information with potential investors. By presenting their pitch and product in a structured format, which included a presentation, demo, and detailed Q&A session, they were able to address questions and reservations on a broader scale. To ensure that investors came prepared, Unplex shared a pre-read memo in advance. This approach boosted investor confidence significantly.

Efficiency through Processes

Closing an angel round is not just about generating interest; it's also about efficient execution. Unplex adopted several practices and processes to expedite the deal closure. Demo days were a cornerstone in creating FOMO, but they didn't stop there. The team maintained diligent follow-ups at each stage of the process. They used Sydecar's founder-SPV product to onboard investors seamlessly, track incoming wires in real time, and follow up with lagging investors. The real-time visibility into each investor's status allowed them to follow up appropriately and keep the fundraising momentum going.

The success of Unplex's fundraise can be attributed to their proactive approach to investor engagement and the FOMO generated through their demo days. Prior to the demo day, they kept potential angels informed about their startup through phone calls and regular social media updates, ensuring that there was already a foundation of interest. Additionally, they recognized the importance of a credible lead investor, which further instilled confidence in the deal and minimized drop-offs.

Unplex's journey to secure angel investment offers valuable insights for startups looking to navigate the complexities of fundraising. Through strategic decision-making, leveraging their network, and adopting efficient processes, they successfully closed their angel round and took a significant step towards realizing their vision of a world where money truly knows no borders.

Syndicate investing has quickly risen in popularity over the past several years. In venture capital, syndication refers to the process of pooling together capital from a number of individual angel investors or VCs to invest in a company via a single check. Syndicate members often collaborate around deal sourcing, diligence, and portfolio management as well. 

Syndicates are in many ways the lifeblood of early-stage VC, but they have developed a complex reputation in recent years. On the one hand, syndicates increase access to venture investing for both investors and deal managers. In the same vein, they increase access to capital for early-stage founders. On the other hand, the boom of syndicate deals in 2020 and 2021 revealed bad, scammy behavior from syndicate managers who wanted a shot at the uncapped upside of startup investing with little to no skin in the game themselves. 

Unsurprisingly, the down market hasn’t been great for syndicates. Syndicate activity has dropped significantly over the past year, with syndicate platform AngelList reporting that Q2 2023 was their lowest quarter in history for closed investments. And yet, some predict a renaissance of deal-by-deal investing over the quarters and years ahead. These optimists understand that deal-by-deal investing is more than just a way for influencers to monetize their audience or for retail investors to get $1k checks into hot deals. A deal-by-deal investing strategy, on its own or alongside a committed capital fund, can make a manager more attractive to LPs, more valuable to founders, and more flexible in how they can deploy capital.

Managing a syndicate was once seen as just a stepping stone, a way to build a track record with the hopes of one day being taken seriously as an investor. Today, there’s an opportunity for savvy capital allocators to employ a deal-by-deal strategy and create disproportionate value for their founders, their LPs, and themselves. 

Alex Pattis and Zach Ginsburg have navigated the landscape of deal-by-deal investing through several markets. In the years since launching Riverside Ventures (Alex) and Calm Ventures (Zach), the two of them have collectively deployed over $200M into almost 600 startups, largely through SPVs. Together, they author Last Money In, the most actionable newsletter in venture capital. We sat down with Alex and Zach to better understand the role that deal-by-deal investing plays in the venture capital ecosystem, especially through a down market. 

Key Takeaways:

• Your Syndicate is Your Deal Flow: Simply launching a syndicate isn’t enough to build a compelling track record. Consider how you can use your syndicate as a source of deal flow to share with established managers as you build your network. If you want to eventually graduate to managing a fund, the relationship you built while syndicating deals could be invaluable. 

• Be a Super-Connector: Bringing established managers into deals can help you earn or increase your allocation to an exciting company. Being a super-connector also increases your value to founders, allowing you to contribute to their hiring, sales, and business development efforts. 

• Build Trust Through Communication: When raising a fund, you are selling yourself and your strategy to LPs. When raising for SPVs, you are constantly selling an opportunity, traction, and story behind a company. Understand what resonates with your LPs and communicate with them transparently. 

• Operationalize Your Workflows: Deal-by-deal investing offers more flexibility. More flexibility gives you more options, as you are free to invest across any sector, stage, or geography. With more opportunities for distraction, streamlining your workflows and building repeatable processes are key to running a successful syndicate.

Selling Yourself vs. Selling the Opportunity 

Raising capital for an SPV requires selling investors on the founder, their company, its traction, and its growth story. An investor’s attention is focused on the opportunity itself, rather than these deal managers. What does the company do? What type of traction does it have? Who are the other investors involved? These are all questions potential LPs can ask and get answers to before they make their own decision about investing.

Traditional funds are all about the manager, their network, and their strategy. What is the manager’s background? What investments have they made in the past? What is their overarching thesis? These are good questions for a potential LP to ask a fundraising manager, but they may be hard to answer if you’re just getting started. SPVs allow an investor early in their career to focus LP attention on the opportunity itself rather than exposing any vulnerabilities in their own track record (or lack thereof).

“In a traditional fund, you have folks that are backing you and your ability to choose the right deals based on a specific thesis. With an SPV, each deal is an opportunity for you to highlight your ability to get into good deals.  If you want to graduate into managing a traditional fund, this is the right place to start – and it’s a great avenue to build trust and get some markups and/or returns for your LPs.”

- Alex Pattis

Your Value is Your Deal Flow

The best way to get started with SPVs is by being a great source of deal flow for other established investors. By helping other investors in the ecosystem, you’re able to build out your own deal flow and get access to better deals.

LPs are often hesitant to get involved in a syndicated deal until there is a strong lead investor. But, it’s hard to get allocation once there’s a strong lead investor in a deal. The best way to stay ahead of this curve is to become the person that brings a strong lead into a round. This builds your credibility with established funds, cements your reputation as a strong source of deal flow, and demonstrates your value to other founders. 

Becoming a deal-flow superconnector is no easy task. While deal-by-deal investing does allow you to build a track record quickly, there’s no shortcut to the hard work of finding exciting founders to invest in before everybody else. However, this type of work compounds. Once your network is established, you’ll find that deals come to you with little effort.

One thing that never changes though is the role of syndicate leads as super-connectors. Whether you’re connecting a founder to a VC, an LP to another syndicate, or two LPs to each other - the role of syndicate leads as facilitators in the ecosystem is a big part of their value.

“When we started the syndicate, I would leverage my relationships to source deals and build credibility. I’d get a referral to a founder from someone I already knew, and it kind of created a flywheel effect. People started sending us deals because they knew we could move quickly and also be helpful to founders. 

Today, I spend very little to no time on sourcing. I spend a lot of time connecting with other VCs and syndicate managers. Then, as companies are looking to fill out their rounds, we’ll bring in other syndicates or funds to help these companies move quicker and also raise follow-on capital down the line.”

-Zach Ginsburg 

Leveling Up: The Path of a Successful Syndicate Manager

It’s well understood that deal-by-deal investing can be an efficient way for an aspiring VC to build a track record. But not much airtime is given to the topic of what happens once you’ve demonstrated success as a syndicate manager (in the form of distributions or significant markups). At this point, many syndicate leads find themselves pulled towards raising a committed capital fund so that they can spend less time fundraising, move more quickly on hot deals, and consider their portfolio construction strategy. 

Alex Pattis and Zach Ginsburg have both “graduated” to managing their own funds, but that doesn’t mean that they’ve left deal-by-deal investing aside. Instead, they’ve layered on committed capital in a hybrid approach to venture investing.  A hybrid model refers to a structure where a manager operates both a committed capital fund and a syndicate. In this model, the fund is able to lead the process, commit capital to a founder, and then open up additional allocation to LPs. This is also referred to as opening up “co-invest” opportunities to LPs.

Learn more about how to use Co-Investing as a Competitive Advantage.

“About a year ago, I raised a micro fund of a couple million dollars. Once the market started to turn, it made more sense to have a fund to be able to write slightly bigger, consistent checks, especially since the market for deal-by-deal is a little less reliable. 

But syndication is always going to be meaningful for us. It allows liquidity opportunities earlier than a traditional fund. The hybrid model gives us the best of both worlds without really changing our strategy” 

- Alex Pattis

Graduating from running a syndicate to managing a fund, or undertaking a hybrid model, isn’t as simple as just standing up a new investment vehicle. Scaling can reveal vulnerabilities in your operational processes that are easy to ignore when your deals are infrequent or your investor base is smaller. Hybrid managers like Alex and Zach have found that proactive and clear communication with all stakeholders is a key part of a smooth process.

“We try to run the process within a two-week timeline, which gives LPs time to sit on the deal memo, do some diligence offline, and come back with any questions that they may have. 
I have to understand what type of deals make sense for my LPs, and sometimes that means telling an LP that a deal probably isn’t the right fit for them. While that might hurt in the short term, it’s an investment in the long-term relationship. There's very little to gain by selling the deal and getting that first LP check without kind of building that trust and that transparency that's needed for a fruitful, long-term relationship.”

- Alex Pattis

Establishing clear and reliable channels of communication with LPs is key to building trust. In practice, this means putting in the time to draft comprehensive deal memos and then making yourself available to answer ad hoc questions relatively quickly. Rather than hard selling the deal, focus on what you know about your LPs. Not every deal will be the right fit for every LP and it’s important to present the opportunity as it is rather than embellishing. Any exaggerations are short-sighted in what should be a long-term relationship with LPs.

These relationships take a long time to build, so deal-by-deal investing is a really good way to build trust with LPs.  Some of our LPs have been with us for a couple years and have seen a couple hundred deal memos. Not only do they get to evaluate the deal, but they get to evaluate our analysis on top of the deal. ‘What does this GP think? Does it align with the way we go about deals?’ Showing investors how you think with each deal memo is a really unique way to build that relationship over time.

"After doing this over the course of a year or two, you actually have good relationships with some of these LPs. And they've also built a track record with you. And so they've built trust through actually working with you on the SPV side and investing in some of your deals."

- Zach Ginsburg

Enjoyed the recap? Check out the full conversation here. 

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Sydecar's Fund+ allows managers to employ a hybrid fund-syndicate model using a single vehicle.  An end-to-end fund formation and administration solution, Fund+ combines the stability of a committed capital fund with the flexibility of deal by deal investing. Built on Sydecar’s proprietary infrastructure, the Fund benefits from automated banking, compliance, contracts, tax, and reporting, making it the best option for the next generation of venture investors.

Get in touch to learn more about Fund+! 

Amber Illig spent much of her career adjacent to venture capital, working in exciting high-growth companies like Apple, Snap, and Cruise. After 10 years as an operator, Amber developed an itch for venture investing. She knew that her startup background and angel investing experience gave her the tools she needed to dive in. She decided to start off with 30 angel investments over three years. Starting with syndicates, Amber has grown from small angel checks to now running a community and fund. We talked to Amber to learn more about her path and investing strategy.

Getting Started with Syndicates

“I was more excited than nervous by the time I wrote my first check. I did so much research and prep that I was ready to rip off the bandaid. I also read several books on angel investing, including Angel by Jason Calacanis. Once I read through that book, I thought: ‘Okay, I can do this.’”

Building a budget

A common rule of thumb for novice investors is to allocate 5-10% of their net worth for venture investing. Given the high likelihood that the investments go to zero, 5-10% should represent an amount of money that the investor is willing to lose completely without impacting their basic needs and lifestyle.

Amber started off investing 5-10% of her net worth. However, as she invested, the work was so rewarding that she reevaluated to allocate up to 20%. This may seem like a large amount to invest in such a high-risk asset, however, Amber knew that the experience, exposure, and connections she was building through her investments were invaluable. Like many other angels, she compared the investment to the amount that one might spend on business school. Both the education and network gained through investing rivals that gained in business school. However, in addition to these shared benefits, investors are purchasing equity that offers financial returns. 

After gauging her appetite and budget for angel investing, Amber worked backward to the number of investments she could make. She opted to maximize the number of investments by choosing to only invest small amounts around $5k. Knowing she would make mistakes early on, these small checks allowed her to gain experience without costly losses. In the past three years, her angel portfolio has grown to 30 companies. 

Direct Investing as an Angel

“If you're thinking about doing this as your career, at some point you have to prove to yourself and others that you can source deals and diligence them on your own. My Phase Two was figuring out how to source companies without a syndicate.” 

With syndicates as the onramp, Amber fell in love with investing. She had a network from her many years in Silicon Valley, and she had the operating and investing experience to know she could lead and diligence her own deals. This is when she knew she could graduate from investing via syndicates to direct angel investments. 

This switch meant sourcing and diligencing deals on her own. While investing became more time-consuming, she also gained control. She developed her own due diligence checklist and could shape a thesis around what she knew best. Given her background working in automotive and supply chain management, she was drawn to companies solving problems for similar legacy industries.

Before the end of these three years, her success was clear. She had invested in companies ahead of rounds from YCombinator, Lightspeed, and Softbank. Her portfolio was showing growth, including one company marked up 36x. Her sourcing abilities and decision-making had her ready to launch a fund. 

Community, Fund, and Beyond

“If I hadn't created a community and stepped into a role where I'm providing value to that community, investing would have been far more difficult. The community has created a unique source of deal flow for me and also portfolio support for our founders.”

An essential support for Amber’s investing has been the angel investing community, The Council Angels. Founded by Amber and 9 other women, they were all operators who were working full-time while starting to invest. Since the early days, Amber has co-led this community alongside Anabel Lippincott Paksoy and now Shriya Nevatia. What started as a small group of women has grown to over 145 members with experience from large tech companies and top startups.

When it came time for Amber to raise a fund, these women were some of her first LP checks. While they were small checks, the Council’s membership got Amber to her first close and allowed her to start investing in the fund’s first 10 companies. This community then gave her introductions to family offices, funds of funds, and banks to reach institutional capital. She now has 56 LPs that allow her to keep growing her investing work and fund. 

With 17 investments made from Fund I, Amber is looking to the next challenge: scaling up to a larger Fund II. For many emerging managers, this can be one of the toughest raises, as they become too large to take small checks from individuals, but are not yet raising a large enough fund for many institutions. Fund managers have to seek out the right institutions willing to invest in an emerging fund, which can be a whole new network from their existing angel investor LPs. 

Nonetheless, Amber’s background as an operator, her track record from angel investing, and her community through the Council have prepared her for the challenge. In three years, she has gone from working as an operator to knowing that she can be a full-time fund manager. Through her three phases of investing, Amber has tackled the venture investing world to grow her investing from a part-time passion to a full-time career. 

Technology is driving change in Venture Capital. Ideas for value-add that used to get shot down due to operational complexity are now possible. For example, auxiliary structures that would have cost a fund $25,000 per year can now be done for $5,000. These new structures and creative solutions will be a theme of the next decade.

This month, we hosted an event with Costanoa Ventures’ CFO Mike Albang to discuss their scout funds and how technology makes it possible. Mike shared his vision for the Costanoa Scout fund program, the successes they’ve had, and the value it creates for both the founders and LPs they partner with.

Here’s some quick context on scout funds before we jump in:

A strategy employed by firms like Sequoia for over a decade, scout funds are small, dedicated funds where the main fund is the sole LP. The fund commits a relatively small amount of capital to an auxiliary fund that is managed by a “scout”. These scouts are typically domain experts and may be rising investors or entrepreneurs. In working with a fund, the scouts can build their track record and establish themselves in VC. The fund will give the scout carry, take the upside of the capital commitments, and most importantly, gain access to deals they otherwise would not see. These deals create opportunities for the fund to co-invest in the company or keep tabs on them for the next round.

Why run a scout fund?

As Mike explained, there are two core drivers for Costanoa:

1. Expand the fund’s network.

2. Empower the fund’s network.

A diverse network of experts engaged with your firm can impact everything from sourcing, to diligence, to winning deals. Scout funds have proven to be a great way to build this network of experts.

Not all networks are created equal. A LinkedIn connection may be considered part of a network, but it will rarely deliver value. Scout programs are the opposite. By tying an expert to their firm through a scout position, VCs gain value-driving individuals in their network. When Costanoa chose their scouts, they were able to strategically select scouts from different backgrounds and industries that would expand and diversify their network.  

The next step is empowerment. As mentioned above, going deeper with a few experts is more impactful than a lightly-connected, larger network. Empowering experts through check writing is a great way to realize this impact. By giving them the ability to invest, VCs empower scouts to build their skills as investors, grow with the firm’s success, and contribute to the firm’s further expansion.

Why hasn’t everyone launched a scout fund?

First, there is the math of the matter. 

Historically, the cost of running a scout program was too high for most firms to justify. Funds like Sequoia have in-house legal and finance operations allowing them to spin up auxilary structures. Not many others have that scale.

For those without in-house teams, VCs had to run scout funds with traditional fund admins that require hundreds of manual hours to set up and maintain the back office. A scout fund with a traditional fund admin would cost up to $25,000 per year. 

These yearly fees add up. Costanoa Ventures, for example, runs four scout funds alongside each core fund. These funds, like most early-stage vehicles, have a 10-year shelf life. That means ten years of fees. Therefore:

The total cost to run a scout fund before was around $250,000. 

Given these costs, VC firms could not make scout funds worth it. Costanoa allocated each scout $200,000. A scout fund would not be possible if it cost $250,000. 

Through automation, Sydecar has brought this cost to $5,000 per year. Now, the math can make sense. 

Beyond the cost, there is the operational burden.

If you have run a fund or even just a Special Purpose Vehicle (SPV), you know how painful things like assembling documents, signing, and wiring can be. That operational burden, like the fee, adds up.

For a fund thinking about adding value to its core practice, many ideas get written off due to the distraction they cause. The level of operations for writing small checks is similar to that of writing larger ones, so spending time on a small check or auxiliary fund can be a waste of time.

This is another place where technology comes into play. A centralized platform to manage everything from signing to wiring decimates the workload and is the difference in whether or not a scout program is viable.

The operational efficiency gained through technology made Costanoa’s scout funds easier to manage and thus worth the strategic upside. For funds smaller than Costanoa Ventures, which has over $2 Billion assets under management, this is even more true.

Scout funds are just the beginning.

For Mike, scout funds are only one of a few common structures that are available to firms. Co-Investment SPVs and Opportunity Funds have also been common strategies of funds in the past, and they are now more feasible through technology.

These structures are all tools in the toolbelt of a firm to drive better returns for their LPs. These aren’t new structures or novel ideas. Instead, it’s the cost of execution of these strategies that have been the limiting factor. Now, as technology redefines their viability, these strategies are open to any VC that wants to bring innovative value to their LPs. 

Click here to watch the full interview. 

Want to learn more about running a scout fund? Reach out to us here. 

In 2021, Bobby Housel was returning to the University of Michigan following a gap year and was anxious to catch up with the founder friends he had made at school. Fueled by this excitement, he started hosting small gatherings of his closest founder friends. Quickly, he observed that  these entrepreneurs were a lot more interested in meeting each other than catching up with Bobby. 

What became clear was that college entrepreneurial programming was failing in two primary ways. Firstly, it was failing to connect the top college founders with one another. At a large school like Michigan there are more than ten different entrepreneurial communities for students. Beyond that, they are massive, lumbering institutions shrouded in red tape and forced to cater to the “average” entrepreneur. This means the top 10% of founders find themselves ignored by most college entrepreneurial programming.

As Bobby held more of these meetups, it became clear there was an opportunity to build a better community for top college entrepreneurs. He soon teamed up with Barry Sabin to launch Founder’s Cupid, a community to help tell founders’ stories through strategic media partnerships, introduce them to their first hires, and provide other support.  

What started as a community focused on connecting like-minded founders has quickly evolved into much more. They now reach three university ecosystems and over 350 founders. From telling founders’ stories through strategic media partnerships to introducing them to their first hires, Founder’s Cupid does whatever it takes to support the top college founders. In addition to providing education and community, Founder’s Cupid launched a syndicate in 2023 to connect pre-seed and seed founders with capital and mentorship. Their first two investments in Ultima Insights, a fintech AI company for investment research, and Fundwurx, a corporate social responsibility company for SMBs, are set to close in June. 

More than Just Consumer Startups

Housel and Sabin believe that colleges across the US are letting value slip through the cracks when it comes to student founders. Common beliefs about this population – from the lack of experience and perspective to the belief that student founders exclusively build simplistic consumer companies – result in this population not being taken seriously. 

But these dated biases are an opportunity for open-minded investors. College students are gaining work experience earlier, sometimes leaving high school with 1-2 internships already under their belt. Students can develop industry expertise through internships, cutting-edge knowledge through university research, and the fresh eyes needed to rethink a stagnant industry. Investors who recognize these shifts will find themselves ripe with opportunity to invest into promising student-founded companies .

Student Founder Communities Must Be Flexible by Default

Balancing schoolwork, extracurriculars, and company building is an extraordinary challenge for student founders. The support that comes from joining a founder community is valuable, so long as membership is flexible and doesn’t become an additional obligation.

Founder’s Cupid has built its community upon radical openness and activities that are opt-in. In letting founders choose when they engage in the community, the community never becomes a burden. Student founders are busy individuals. A required commitment to a community is counterproductive to their startup’s success. 

In connecting students with alumni investors, Founder’s Cupid seeks out investors that have the skillsets and willingness to help in a concrete way. Intelligent matchmaking is key to ensuring that no one’s time is wasted. Founder’s Cupid focuses on delivering value in every match  by seeking out alumni investors that both want to be involved with their alma mater and have conviction in the school’s talent pool.

Betting on Student Founders for the Long Run

Students can be some of the most motivated and visionary founders. But they have different challenges to navigate, from discouraging parents, demanding classes, and the general distractions that come with  the college experience. Investors working with student founders should understand the unique challenges that they face so that they can provide better, tailored support.

Student founders are often stretched in a million directions. While top student founders are wizards of time management and optimization, they typically don’t operate like other founders. Their work on their startup may be concentrated on weekends and evenings, or they may have to ease up on their speed of execution during finals week. 

Student founders are more likely to pivot as they refine their personal mission and gain knowledge from their studies. But, even if their first idea doesn’t find product market fit, the entrepreneurial itch often found within student founders will likely lead them to another exciting idea before too long.  From an investor’s perspective, supporting a young founder early in their journey can pay dividends. Rest assured that they will come back to the investor with opportunities for years. Some investors describe this as “tagging founders” -- investing money super early as a way to keep tabs on them for years to come. 

Investors can expect to be more hands-on with student founders than they might be with more experienced company builders. Investors who demonstrate an ability to help and advocate for student founders, not only further win their trust, but can supercharge their growth. 

Knowing these differences will help you navigate the promising pool of student-founded startups. Startup investing is already a wild experience. Investing in student startups will make the entire process more wild and rewarding in every way. 

Roots

Walter Chen was exposed to entrepreneurship at a young age. His aunt founded Golden Wok, one of the first Chinese restaurants in Central Pennsylvania, and he has watched his family operate the business for most of his life.  A Taiwanese immigrant, she started the restaurant with only Walter’s father’s support.  With this investment, Golden Wok took off and ran for 30 years.

It was a teenage Walter who bought the domain for GoldenWok.com and built their website. An entrepreneur at heart, Walter has been dedicated to helping startups, learning from founders, and understanding how businesses build. This passion led to him co-founding Sacra, which publishes research reports on private companies. When his aunt sold Golden Wok, Walter took the domain back to build Golden Wok, the venture capital version. Much like his father, he is using the Golden Wok name to invest in other companies, helping founders bring their vision to life.

Turning to Secondaries

Golden Wok has primarily focused on helping companies in their founding stages. Walter’s passions and expertise have led him to work with founders to build their businesses from zero to one.

“I am excited not about investing per se, but about building businesses with people I have a good relationship with.”

In addition to feeding his passions, Walter also knew that early-stage investing was where he could get the best returns. But with the recent downturn resulting in compressed valuations for tech companies, he realized that there were more and more appealing opportunities within the secondary markets. He saw shareholders looking for liquidity, giving secondary investors an opportunity to buy shares at great prices. 

Taking the leap into secondary markets didn’t mean a departure from Walter’s investment thesis. Just like his early-stage investing is premised on relationships, many of his secondary investments have come about from relationships built over time. 

Relationship-based Secondary Sourcing

Walter and Chris Savage, CEO of Wistia, have been friends for over a decade. Walter had long admired the company and enjoyed watching it grow over the years. While he has long wanted to be a shareholder, the timing had never worked out. Wistia had only raised outside capital (a modest $1.5M) to seed their business in 2005. They used that initial funding to build a highly profitable, capital-efficient business off the bat.

Given the recent downturn, some Wistia shareholders sought liquidity, finally opening up an opportunity for Walter to invest. 

This process of sourcing a secondary deal through a relationship was not new to Walter. His investment into Podia was similar. It was sourced out of an 8-year relationship with the founder. 

Given these long-standing relationships, the diligence process for Walter’s investments in Wistia and Podia looked a lot different from his early-stage investments. Instead of having just a few days or weeks to look through a startup’s data room before making the investment, he benefited from years of watching the founders build their companies. He had first-hand knowledge of the founders’ capabilities and knew that he wanted to invest long before the investment opportunity came about. This expedited his due diligence process and gave him full confidence when investing. 

Beyond the financial opportunity, Walter found these investments extra rewarding, as he had grown with the founders and cheered them on for years. 

Early-stage to Secondary Investing

For investors familiar with early-stage investing, secondaries seem like a whole different game. Due diligence in early-stage investing often revolves around qualitative analysis, focused on the founders, the market opportunity, and an idea. There are few (if any) revenue numbers to consider. In contrast, secondary transactions usually occur later in a company’s lifecycle. These investment decisions are typically made based on years of performance data and pattern-based predictions.

Despite these core differences, early-stage investors have an advantage when considering secondary opportunities. They have a surfeit of relationships with founders from the earliest stages. In watching these founders and companies grow, investors develop a full picture of market opportunities that informs their due diligence process. They are primed to evaluate deals at any stage within their specific sector. 

This advantage can make secondaries a fitting supplement in an early investor’s strategy and help assuage their FOMO from early-stage deals they do not do. Investors who miss out on early-stage deals need not fret with regret over missing a great deal. In this market, there may be a secondary opportunity. 

Looking forward, Walter envisions secondaries will continue to play a role in his investing and a larger role in the ecosystem as a whole. It is speculated that with fewer distributions, investors may turn to secondaries to gain liquidity. 

While secondary investors will have to sift through companies that have been overhyped with inflated valuations, they are many opportunities to purchase equity at a significant discount from the past year or two. This is the time for early-stage investors who missed out or felt priced out to leverage their relationships and bring secondary investing into their strategy. 

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Interested in executing a secondary transaction? Sydecar supports secondary SPVs of all sizes starting at just $4,500. 

As murmurs about an impending recession rippled through the startup community in early 2022, many became anxious and risk-averse. But Gadi Borovich and Daniel Ha recognized the opportunity. At the end of 2022, they were wrapping up deployment of their fund at XX, an accelerator associated with WeFunder, and had a strong feeling the timing was right to start their own fund. Thus, Antigravity was born. 

For Daniel, the second half of 2022 reminded him of 2008, when he started his company, Disqus. Noticing the similarities with 2008’s macroeconomic environment, he felt that the next couple of years would be one of the best times to start a company. More importantly, he knew that any seed funds deploying capital during this time would have some of the best performing vintages.

Daniel came into the startup ecosystem as the co-founder of Disqus. A product expert, Daniel led the company through finding product-market fit, and upon exiting the company, he brought that knowledge to seed stage companies as an advisor and investor. In 2020, he joined XX as a Partner and met Gadi Borovich. In Gadi, he found a partner with energy, work-ethic, and insight that pushed him to think about what more they could do together as investors. 

Gadi started his career on Wefunder’s growth team then became a Partner at XX. During his two and half years at XX, he backed 40+ companies and demonstrated insight across sectors from HealthTech to EdTech. A proven investor, it seems inevitable that he would launch his own fund. 

Now, after working together for two years at XX, Daniel and Gadi are launching Antigravity to bring their product and growth expertise to a new generation of founders.

Finding Fund-Market Fit

A product guy at heart, Daniel approaches fund building with a focus on finding what he refers to as “fund-market fit.” To him, this means identifying a specific customer pain point (with his customers being early stage founders) and offering a solution that addresses that pain point directly. Finding fund-market fit for Antigravity means identifying what they can contribute to both portfolio companies and their investors, whether that is anchored in their relationships, insights, or deal identification. Operating in this way will create a feedback loop that allows Daniel and his partner to constantly refine and improve their offering for companies and investors.

Finding fund-market fit also means articulating Antigravity’s unique vision and selling it to investors. The team’s secret sauce lies in their ability to provide very early capital paired with hands-on guidance – but knowing that is not enough. Daniel and Gadi are constantly adjusting how they package and present their value to investors, many of whom are inundated with opportunities. 

“There is a constant challenge of needing to justify your existence to yourself and to the people that are on your side – your investors, your companies, and other partners.” - Daniel Ha

Like any product looking for market fit, Antigravity's approach has evolved since its inception. While the recession was a catalyst for launching the fund, they are also building an edge that will allow Antigravity to endure through economic cycles. These are the challenges that give Daniel an excitement reminiscent of his experience as a founder 15 years ago.  

New Approaches

As first-time fund managers, Daniel and Gadi were intimidated by the mechanics of launching a fund. They used this to their advantage by questioning traditional methods and looking for opportunities for innovation and disruption. 

“We wanted to examine and break down the principles of running a fund. We wanted to question what others took as fundamental truths. We started by saying: ‘Why does it have to work this way? What could we do to make it better?’” - Daniel Ha

This philosophy led them to Sydecar where they immediately felt like they had an aligned partner who would walk them through the challenges of setting up their first fund. In Sydecar, they found a team that inspired confidence and a product that would streamline the mechanics of starting and running a venture fund.

“As investors, people come to us when they don’t know exactly how to think about a problem set or a market, and we give them a source of confidence. Sydecar does that exact same thing for us as fund managers.” - Daniel Ha

Whether you’re building a product or starting a fund, it’s easy to follow what other people have done. The harder route is creating something that is distinctly yours. Venture capital is a young industry that is built on disruption and challenging established norms. With this in mind, Daniel and Gadi are committed to executing a strategy and defining a voice in the industry that rises above the noise. 

Summary

Managing a fund for the first time can seem scary, but Daniel and Gadi are diving in. Bringing their experience as accelerator investors and product experts, they are approaching the fund like a product, seeking to find its unique voice and perspective. Fueled by the opportunity brought by a downturn and their success working on XX, they hope to build something distinctly theirs.

Prota Ventures was founded in 2018 by a team of ex-founders who were passionate about providing the support to the next generation of startups at the earliest stages. They’ve come a long way over the past five years, building a portfolio that boasts several unicorns, a reputation of a high caliber, and now with the goal of launching their first fund.  

As repeat founders themselves, Prota’s competitive advantage lies in their ability to identify strong leaders. They know that subject matter expertise doesn’t always translate to strong leadership skills – and a lack of strong leadership is one of the primary reasons that startups fail. 

Prota approaches their portfolio with a multi-pronged approach and seeks to support founders in a customized manner. They run an incubator, a startup lab, and a traditional venture capital fund and take a hands-on approach to helping founders navigate changing needs as they grow. Their portfolio includes companies like Figment, Stix, and BirdBuddy. 

For close to five years, the Prota team has built a compelling track record through their SPV investments. This strategy acted as a proof of concept – an opportunity to test their thesis and share their decision-making process with LPs. With several breakout companies in their portfolio, there’s no question that Prota has proven their concept. At the end of last year, they set out on the path to raise their first fund, with a focus on formalizing their processes around diligence and deal execution.

Establishing a Track Record

Prota started out operating as a partnership and syndicating their investments using SPVs. The partnership would invest and find other investors who join on individual deals. Given the work of coordinating and collecting information, SPVs were getting unwieldy, so Prota turned to Sydecar. 

It was important to find a tool that would complete investments quickly and for a variable price that could flex with each investment, given the size and stage of their investments.

“Once we started using Sydecar, we closed deals five times faster than our previous manual workflow allowed. On the average, a deal would take almost a month and a half to close. Now we're able to do it within about a week.” - Gary Raju, Fund CFO

Starting with an SPV strategy allowed Prota to prove out their ability to source high quality deals, diligence appropriately, and collect commitments to fill allocations. The track record that Prota established through syndicated investments has helped them build relationships with investors and demonstrate the value of their approach, setting them up for a successful fundraise.

Launching a Formalized Fund

When making the transition from SPVs to fund management, the Prota team knew that they needed sophisticated processes. A larger pool of capital to deploy meant more LPs to keep track of and more founders to support. They needed to operate more efficiently and spend less time keeping track of who has signed fund agreements, who has sent money, and who has access to documents. They also knew that they needed to prepare for a potential audit when raising funds from institutional investors.

With these goals in mind, Prota turned to Sydecar’s Fund+ product. Sydecar’s platform allows Prota to handle everything from LP onboarding to commitments to K-1s in one place. It acts as a one-stop shop to raise and manage their fund and their investors. The Fund+ product also provides a document center where Prota can streamline communication with LPs during the fundraising process.

“Sydecar gives us real time visibility into all of our our capital commitments and capital call schedules. We love having a document center where every single deal and every single document is easily accessible. We’ve spent significantly less time managing spreadsheets and email threads as compared to our previous fundraises.” - Gary Raju, Fund CFO

Cultivating trust with investors is top of mind for any emerging fund manager. They’re tasked with the challenge of inspiring confidence in their experience, their investment strategy, and their ability to execute. Especially as they raise from new investors, there is a higher demand for organization and clear processes. Prota knows that their fund provider can either contribute to building that trust or detract from it. They saw in Sydecar not just a product that would allow them to operate more efficiently, but a team that would act as an extension of theirs and inspire trust with investors of all types. 

Summary

Prota has grown from a friend group of ex-founders to an incubator and fund by leveraging the experience of their founding team and working with founders early. After building a strong track record through their labs and SPVs, they are now raising for a new fund with the goal of a more formal process. With the support of Sydecar, Prota is able to raise and manage their fund on a product that both their team and investors love.

Syndicates are a great way to build a large investing community that shares capital, dealflow, and knowledge. However, launching an investor syndicate can feel like a cold start problem. Much like a marketplace, a successful syndicate must manage the demands and growth from two sides: the LP base and the deal flow. Syndicate leads can feel like they are being stretched in two directions, trying to create the best quality on both sides.

Colin Gardiner knows a thing or two about marketplaces, having worked in leadership positions at companies like Roamly and Outdoorsy. After spending over 5 years as an angel investor, Colin launched the Yonder Ventures syndicate in the fall of 2022 to scale his investing. Since founding Yonder, Colin has run 6 deals and grown his LP base to 200+ investors. We chatted with him to learn more about his experience building a syndicate, how he works with his investor network, and how he works with his investors to inform thesis and dealflow. 

Setting up and growing a syndicate

Sydecar (SC): Why did you decide to start a syndicate? 

Colin Gardiner (CG): After working on four startups and raising over $200M, I started advising a few companies and helping them with fundraising. In doing this, I realized that I was sending these great companies to everyone else when I have a group of friends that I should be inviting to invest. I wanted to help these friends bring in their capital and participate in the upside, so setting up a syndicate was the clear next step. 

SC: What was the set up process like?

CG: When I was ready to get started, I explored a few providers and was struck by how expensive most SPV platforms were.  

That's how I came to Sydecar. I was excited that the fee structure could be flexible with my deal size. Sydecar’s product is private, which is important for me as well. In my first deal, the company didn't want me to send it out broadly. They were concerned about privacy.

SC: How did co-syndicating a deal affect your syndicate?

CG: I launched my second deal in December as a co-syndication with Harry Campbell. Through co-syndication, Harry and I were able to leverage our combined networks, allowing me to reach a new pool of investors. My LP base grew from around 25 investors to almost 200 – just from this one deal. All of a sudden, my deals were filling more quickly. It’s been fulfilling to see these new investors get excited about my deals, give me  feedback, and send referrals to new investors.

SC: Speaking of the growth that you've had, you are a fan of “building in public”, largely through your social media and podcast . Why do you share your journey so openly?

CG: After years of advising startups, I’ve seen how important access to knowledge is. When information is out in the open, the whole ecosystem benefits. Investing is not a zero-sum game. I need to know tons of people to get deal flow. They bring me in on things, and I bring them in.

A lot of my work in launching this syndicate has been talking to people. I want to synthesize and share that knowledge to help people start investing. The more capital that's out there, the more companies can be funded. This gives us more innovation and a better startup ecosystem. 

Understanding the needs of your investor base

SC: You talked about the challenges when you were first starting out, but how have those challenges changed as you grew? 

CG: With over 200 LPs, I am now running into scalability problems. The more deal flow I have, the more time I have to spend on diligence. I can’t send my investors every single deal I get excited about because then my capital pool will be stretched too thin. It’s more important than ever that I pick the deals that will most resonate with my syndicate investors. 

SC: How do you learn what will excite your investors? 

CG: One useful practice I have is that I send a welcome email to every new syndicate member. It describes my investment thesis and where my edge is. It also lists any open deals in the syndicate and asks what they would like to see. I store this information in a large Airtable which allows me to track what each investor likes and which of my deals they have invested in. I am starting to see trends in their interests. This helps me evaluate the likelihood that they'll invest in future deals.

Finding exciting startups and securing allocation

SC: What types of startups are you investing in?

CG: Marketplaces are my area of expertise. I believe there will be exciting growth in “marketplace+” models. These are marketplaces plus something else, such as Marketplace+SaaS or Marketplace+FinTech. Everything will trend this way, whether it be through a vertical SaaS adding a marketplace or a marketplace adding in vertical SaaS.

In this day and age, building a horizontal marketplace is really hard. Most things have already been done, and most marketplaces are cleaving verticals out of a horizontal marketplace. I am looking for businesses that are trying to embed deeper with either the demand or the supply side and build software to capture GMV from horizontal marketplaces.  

SC: How do you ask for the right allocation and predict what you're going to be able to raise?

CG: Early on, I did not know how to predict the amount I could raise. Now, when I see a deal that I have conviction for, I take the bet on raising more than what feels safe. If I feel I’ve found a great deal, I trust other investors will think the same. 

If I know less about a space, I will reach out to angels to get feedback on the deal before I ask for a certain allocation. Often, asking investors for advice will lead to them investing, helping fill the allocation.

Pushing yourself to raise more builds your audience, your LP base, and your network. In turn, that will make it easier to fill your next allocation. I think people get scared they can't raise enough. I'm getting to the point where I'm less concerned about that piece and more concerned about getting the best possible deals. If I can do that, then I know I’ll be able to fill the deal quickly. 

Schedule K-1s, shortened to “K-1s,” are used to inform investors about their share of income and expenses in an investment. Investors use this information when filing their tax returns. Specifically, they take into account the gains, losses, interest, dividends, and other distributions (known as “taxable events”) from an investment vehicle (including an SPV or fund). An investment vehicle must issue K-1s to investors every year in which a taxable event occurs. These forms are due to investors by March 15, giving investors time to include them in their own tax returns before their April 15th deadline.

Why do K-1s have such a bad reputation?

Typically, the preparation of a single entity’s K-1s takes days of manual work by deal sponsors, fund administrators, and accountants who have to review the entity's financial statements, determine the allocation of income, deductions, and credits, fill out the K-1 form for each beneficiary, and distribute the forms. At tax season, fund administrators who support hundreds or thousands of investment vehicles are left scrambling to prepare tax returns for up to tens of thousands of investors. This process quickly becomes arduous, costly, and often results in missed deadlines given the manual labor and variability involved. Venture investors have become accustomed to filing an extension on their personal taxes due to delayed K-1 distributions from their investments.   

Can we automate K-1s? 

Sydecar proudly delivered thousands of completed K-1 forms to investors starting in the first week of February. As of February 28th, we delivered 100% of K-1s to investors who participated in an investment into a private company.

The foundation of Sydecar’s product is a proprietary ledger system that records all accounting events within an SPV or fund. There are a number of different events that could occur in an investment vehicle: an investor contributes capital; capital is invested into a company; capital is paid back to investors; an investor sells their interest in a fund to someone else. Because we standardized our SPV and Fund structures, Sydecar is able to automatically record everything that happens within them. In contrast, traditional fund administrators support a wide variety of SPVs and funds with non-standard structures, which requires tax and financial reporting to be done manually. Many of these companies elect to use off-the-shelf software and hire accountants to manually enter data.

Rather than hiring accountants to work through each vehicle and the individual investor’s allocations manually, Sydecar’s product connects ledger data directly to our tax software and inputs the values for each investor instantaneously. With our K-1s generated and distributed by the product, our process was overseeing data integrity and reviewing any special circumstances that may arise. This automated process allowed the team to avoid the hours of manual inputs, review, and corrections to human errors which can lead to significant delays.

Through standardization and our ledger, Sydecar has been able to deliver K-1s not just on time, but early, easing the stress for deal leads, accountants, and investors alike this tax season. We are excited to continue building the rails for an easier tax and compliance process for private market investors. 

From Shark Tank to Instagram to the ankles of hikers at Los Angeles’ Runyon Canyon, Bala has built an iconic brand that reimagines fitness products in a fashion-forward way. Co-founder and CEO, Natalie Holloway, has led the company from a one-product brand pitching on Shark Tank to a globally recognized brand that just fundraised on Sydecar. We chatted with Natalie about her experience developing and growing Bala, as well as her tips for fellow consumer founders!

Sydecar (SC): Bala’s Instagram marketing has brought a fresh, unique look to workout equipment. How did you gain conviction that this brand direction would be effective? 

Natalie Holloway (NH): Early on, we wanted Bala to stand out in the fitness industry and we felt that no other brand was leaning hard into the fashionable side of fitness. We felt that Bala could blend your fashion self with your fitness self and so we made our photoshoots and product shots highly stylized. We have stayed true to this vision since the beginning, so fashion is part of our ethos. 

SC: What were key decisions that you think shaped Bala’s success so far? 

NH: We are always looking for innovative ways to sell our products to customers, and we focus  on the product first and foremost. In the early days, we did not overthink things. We just kept executing and did not look back. We created momentum. 

SC: As a consumer goods founder, what were the challenges you encountered when fundraising? Did you discover any best practices? 

NH: Fundraising is tough. You have to tell a really compelling story as a brand about why you must exist in this world and why customers need you to exist. You have to demonstrate a great product roadmap and financial model, and tell a compelling story on how you will achieve your goals. Let the no's roll off your back and keep moving. Approach people shamelessly because you likely will have to approach hundreds of people before you get your first yes! 

SC: How has fundraising for this recent round compared to your experience on Shark Tank?

NH: When we went on Shark Tank, we were a completely different company. We were a one product brand. Today, we have built a reputable brand and have years of revenue to prove our position in the market. The biggest change is in my personal confidence. I’ve pitched myself and my business hundreds of times, and the stage fright has gone away.

SC: How are you using your new funding? What product launches or campaigns are you most excited to execute? 

NH: We are launching a slew of cool products this year. We are very excited to show our customers what we have been working on to enhance their fitness routines. We will also do a bigger push on our workout platform Balacize. I’m really excited to get more people working out with us online. 

SC: Any advice for founders building their own consumer brands?

NH: First and foremost, focus on getting the product right, and stay true to your vision. If you have a great product, the customers will come. Value action over inaction, and make sure you are always experimenting. Don't let the no's get you down. There will be a million no's before you get to the yes's that really matter.

Investing as a Limited Partner in a Venture Capital fund has a high barrier to entry. Minimum check sizes will often be over $100,000 and only investing in one fund does not allow diversification in strategy. Historically, this has prevented smaller check writers from participating as LPs. This particularly affects investors from marginalized backgrounds as they are less likely to be able to invest the minimum check size into several funds. 

3-VC is looking to change this. Gale Wilkinson of Vitalize Venture Capital, Caroline Lewis of Rogue Women’s Fund, and Mac Conwell of RareBreed Ventures have teamed up to provide a new way for LPs to invest in funds. Through 3-VC, accredited investors can invest in all three funds with only a $10,000 minimum commitment. This structure allows smaller investors to participate in funds, even as the funds grow. In allowing a diversified, low commitment option to invest in VC funds, they hope to increase access for underrepresented and female investors.

Sydecar is thrilled to be supporting this initiative that aligns with our mission of increasing access to and transparency in the private markets. We chatted with the team on their backgrounds as investors, how to increase access, and their vision for 3-VC. 

Was there a specific experience or moment that made you realize the importance of increasing access to venture capital, leading to your interest in forming 3-VC? 

Caroline Lewis (CL): When I first was getting started as an angel investor, I went to a local investment group. I will always remember walking in and seeing a room that was 98% Caucasian, cis men over the age of 45. Many were supportive, but I remember feeling like I didn’t belong. Subsequently, when I spoke to a few funds, many of the investors said I shouldn’t even consider investing unless I had at least $250K to invest. 

I was a leader at a large corporation, was making good money, and had saved for angel investing purposes, but I still felt locked out of the industry. In my experience working with underrepresented investors, I found there is an initial risk aversion, often due to social and environmental conditioning. In talking to Mac and Gale, we realized  that many of the investors in our funds wrote small checks or were first time investors. They were key to us getting started, so we are all committed to ensuring they can grow with us as our funds get bigger. 

Mac Conwell (MC): In my experience as founder, working at a fund, and launching my fund, my ethos has always been about access. In my first fund, I had a diverse group of over 200 LPs who were getting a chance to access the venture asset class. As I was thinking about raising a much larger second fund, the smaller check writers investing less than $100,000 weren’t going to be able to access my fund. That was going to be the vast majority of my first fund’s LPs. It felt wrong that they would be excluded. 

Gale Wilkinson (GW): I have been in the VC industry for 10 years and I haven't seen much movement in terms of the percentage of dollars going to underrepresented founders. I believe the way to fix this is to dramatically increase the number of dollars being deployed by underrepresented general partners and limited partners. 3-VC provides an accessible on-ramp for more people from underrepresented groups to invest. As these investors dip their toe in the VC waters, they take the first step to deploying more capital in this asset class down the road. 

What was a key learning you had in starting a diversity-aware fund that emerging investors should know? 

CL: The Rogue Women’s Fund is specifically focused on investing in founders who identify as women and non-binary. This segment represents the majority of the US population, but yet still remains a minority when it comes to investing. Report after report shows that this population continues to outperform – in a bull or bear market – by a significant amount, yet funding is still critically low. If you’re an accredited investor, working a high paying job, and you care about this issue, then you need to be part of the solution. There isn’t going to be “someone” else that steps-up and starts funding more women. It’s you. If you care about women’s social and economic empowerment and you care about making more money, then you should be investing.

MC: Throughout my career, I was taught that venture was done in a specific way. That funds and fees are to be set up in a specific way. There was this playbook. In raising my first fund, I learned that you don’t have to follow this playbook. Venture as an asset class is not fully baked. There’s so much room to do things differently and to be innovative. Just because nobody’s seen it before or nobody’s done it before doesn’t mean it can’t be done or shouldn’t be done.

Do you see this new structure changing how you approach investing and portfolio support?  

CL: The biggest advantage of this new structure and opportunity to how we invest and support founders is furthering the investor support that Rogue Women is able to offer through an even broader and more robust LP base of skilled individuals that want to help the portfolio companies.

Have you encountered unexpected challenges in coordinating between yourselves or with LPs? 

CL: The only challenge was finding a trusted partner for the facilitation of the legal, accounting, and platform for this vehicle that shares our values and commitment to excellence long term. We’re grateful that Sydecar is that partner. The benefit of working with Mac and Gale is that we have a foundation of trust that we built through the Kauffman Fellowship program.

MC: It's worth it. This is not without precedent. We've seen funds have successful strategies building large LP groups of qualified purchasers, as the restriction is up to 2000. We knew it was viable. The more positive aspect of coordination has been getting to educate people about this asset class, how to work this asset class for their personal benefit and to share with others to help grow the asset class. 

What do you hope will be the long-term impact of 3-VC? 

GW: I hope more accredited investors are able to invest in VC funds, which have historically required high minimums that prevent many individuals from participating. A VC investment is a great way for new investors to begin investing in private markets, as each fund will have a diversified portfolio which by definition helps to mitigate investor risk.

CL: I hope that this opportunity inspires the outsiders, underdogs, and those critical to our society to leverage the power and wealth they’ve worked so hard to gain to change the world through investing in this asset class. 

MC: I hope to help grow wealth for significantly more people from more diverse backgrounds. The ability to put $10,000 a year for four years into a vehicle allows somebody the opportunity to learn and grow, becoming more proficient and able to invest in more vehicles. The long-term hope is that we will see more diverse GPs getting more capital because the pool of capital is more diverse.

Some of the best startup operators are generalists who wear multiple hats. They have to play multiple roles, dive into new areas of expertise, context switch, and push themselves beyond comfort. They become great at working across a wide range of skills and find this best unlocks their potential.

However, as companies mature, responsibilities are divided and roles are specialized. The startup operator is faced with a paradox of expertise: the more closely a person is immersed in an industry, role, or company, the harder it can be to see new patterns, prospects, and possibilities. To keep reaching new knowledge, startup operators can turn to investing. By investing into early stage companies, they regain exposure to a wide variety of professional experiences, company dynamics, and strategies. These experiences in turn inform the challenges they face. Their portfolio creates a wealth of knowledge that they can tap into for their work as a startup operator or future investments. 

This power of diversified experiences is clear for Carey Ransom, who has worked across various roles in startups, is an investor, and is the Founder and Managing Partner of Operate, a venture studio that invests capital and a world-class team into product-centric entrepreneurs building data-centric software companies. We chatted with Carey on his experiences as a startup operator and investor, and how the studio model allows him to synergize his experiences.

Sydecar (SC): How did you first get into startups?

Carey Ransom (CR): I got into startups almost 25 years ago. My first experience was on a startup team within an existing software company where I got to observe how quickly things could move.

I really liked that, so then I went to a smaller company, and then an even smaller company where I was effectively a co-founder. I realized that very early stage was my sweet spot.

There's a difference between someone who has to be a founder and someone who's generally entrepreneurial. There are people who have to be the founder. It has to be their idea. I tend to be more entrepreneurial. I like to be around an interesting idea that I can contribute to in some way, but I don’t need to be in charge.

After doing this for eight or nine years, I realized I’d been almost everyone. I've been CEO, I've been the SDR, I've been the CFO, I've been the product manager. So then I thought, “How do I do work with a whole bunch of founders in parallel?” And that's how I ended up starting Operate. 

SC: Why did you choose a studio model vs a traditional venture fund?

CR: We called it a venture studio because we wanted to have flexibility for whatever we wanted to do, whether we start a company or lead a seed round.

This model has allowed me to go super wide, which is best for my personality and skill set. I’ve seen more companies than most people I’ve met, and I’ve seen that there are always multiple different answers to any question that comes up at a startup.

SC: How does Operate use SPVs?

CR: We initially used a fund structure so that we could just do a diversified pool. But then we started to see that there were cases where either the company needed more money than we were willing to invest out of the fund or we wanted to own more of these companies through a follow-on investment. SPVs were the perfect tool to accomplish what we wanted to do.

Today, we have 25 portfolio companies and our relationship with each one is totally unique. We deploy capital and provide services in a way that makes sense for us and our companies. That’s where SPVs came into play, because they allow us to have this level of flexibility with how we deploy capital.

We'll continue to use SPVs because there is some amount of balance that we need in a pooled fund. For example, if we have a $10 million fund, we don't want one investment in there to be half of that. But, we will have companies where we need SPVs as a way to increase our amount invested or ownership.

SC: How do you evaluate investment opportunities?

CR: The market says put a pitch deck together, pretend like you have it all figured out, and then go convince the market to give you money… so that you can go figure it out.

I take the total opposite approach. You pitch me as a founder, and I say “Look, I know you don't have it figured out, so let's not play this game. Let's have a real conversation about who you are, what you've learned, what you're trying to learn.”

We feel like we're pretty self actualized. We know where we can help or can’t help, so we want to have an honest conversation with founders. With this approach, you're putting yourself in the position to have the best outcome and to provide the most value to these companies. 

SC: How do you see the industry evolving? Do you envision more studios popping up?

CR: I don’t necessarily see that. You've got to have a real stomach for a venture studio. People don't know how to invest in these yet. People want structure and predictability, and studios don’t have that, so it's almost counterculture to venture. 

I've told a lot of people the best way to do this is to fund it yourself. Or you can have a single LP who is captivated by your vision. The most interesting studios that I've met have a single LP funder, or they're funding it themselves. 

Given the choice, I would fund it myself because I know how much value we've stacked and created in the last two and a half years. The funny reality is that we're going to get to a place where we can fund it all ourselves; that'll be the point at which everybody else wants to pile in even more.

Founded in 2021, Reflect Ventures is a syndicate investing in emerging markets. They invest in core infrastructure areas where there are significant barriers to entry and where digitization can enable huge economic gains. Their portfolio represents a global approach, with dozens of companies operating in over 20 countries on 5 continents. To date, they have 250 investors accessing deals through Reflect Ventures. 

Led by four partners, Dan Deac, Michael Friedman, Jor Law, and Buddy Ye, located across the United States, China, Singapore, and the UAE, the team leverages decades of experience leading and investing in companies to bring value to their portfolio companies.

We talked with partners Michael Friedman and Dan Deac about the challenges of running a large syndicate, how they leverage syndication to conduct better due diligence, and how they provide their portfolio companies with meaningful value. 

Sydecar (SC): Tell us how you decided to start Reflect Ventures.

Michael Friedman (MF): In early 2021, my co-founder, Dan Deac, and I were both involved with a VC accelerator called SOSV. We were excited about one of the companies coming out of the accelerator, but the minimum ticket was $500k and none of us were willing to put up that much individually.

They were not willing to negotiate a minimum ticket. Instead, they said, “Bring friends.” So we went through the whole process of learning how to put together a syndicate. It was so complicated to figure out that, by the time we finished, it seemed a horrible waste to just do one.

SC: Reflect Ventures doesn’t use a traditional fund structure; instead, you allow investors to build customized portfolios. Could you tell me more about this model?

MF: We use a syndicate model which allows each investor to build a customized portfolio. We do not ask them what their portfolio objectives are, then say “Okay, We will design it for you.” We let them choose each investment that they participate in.

SC: Are there certain challenges that you encounter with this model compared to the more traditional fund structure?

MF: Definitely. First off, there are some startups that don't want to deal with a syndicate because you can’t tell them exactly how much you’re going to invest off the bat. You have to tell them: “I don't know; I have to ask my syndicate members.” A fund can move a bit more quickly.

There’s also a sense that you're always out there chasing for LPs. With a fund, you have the fundraising phase, and you have the investing phase. With a syndicate, they're simultaneous.

SC: How does running a syndicate change your investing style?

MF: By letting people choose the deals that they want to be in, you get a group of people for each deal who are particularly interested in that company, sector, or geography. So, you end up with a group of people who can be supportive to the startup later on.

Dean Deac (DD): We are indeed a syndicate, but I would say we behave more as a hybrid between a venture fund and a syndicate. A lot of other syndicators write a check to the company, and that's where the relationship with the startup ends. We spend a significant amount of time helping the companies we invest in. We always have open doors, open emails, open everything for any kind of help that we can provide.

MF: Another big advantage of running a syndicate is that it keeps you honest.

With a lot of VC firms, if everyone knows that a certain guy is championing the deal, it will get done. And it gets done, unless someone finds a real red flag. Process can be a formality.

For us, we have to go through the full diligence process on every deal. There are no shortcuts because every single deal is presented to the syndicate members, and they choose whether it gets done or not.

Even though we are planning to move forwards towards a fund, we plan to keep the syndicate because it makes us better investors. We can never take a shortcut.

SC: Have you found that your model is unlocking different kinds of investors compared to most venture capital funds?

MF: We see a huge variety of investor types. Some have been investing into syndicates and funds for a while, and some are just starting out. Our model is more accessible for smaller check investors. 

We also get people who have a different attitude towards startup investing. Not the type who wants to give you their money and forget, but the type who wants to be more involved.

SC: How did you decide to focus on emerging markets?

MF: We took a look at the US market, and especially if you think back to 2021, valuations were ridiculous.

We wanted something that would distinguish us from other investors. We wanted something where there was a big opportunity and where we had an advantage. We have various emerging markets experience, so we looked at companies in places like Pakistan and Morocco.

We saw companies in spaces where it was pretty obvious there were gonna be oligopolies or monopolies. These are spaces where there will be huge advantages to first movers, and where the winner is not gonna be based on branding, but on price, service, and efficiency.

SC: What excites you about recent deals that you've seen?

We are seeing strong evidence that our thesis is right. Industries like trucking, busing, supply chain for construction, materials for neighborhood stores, courier–all of these are being revolutionized by mobile technology.

In countries like Nigeria, Pakistan, and Argentina, the smartphone is changing from a toy for the rich to an essential business tool for the lower and middle class. A trucker in Pakistan will invest in a smartphone because it lets him get a new load more easily.

When we looked at emerging markets, we saw the opportunity that these markets will evolve the same way that China or India have in the last 20 or 30 years with an emerging middle class.

DD: As Mike said, with smartphone penetration and general behavior shifting, we think there’s going to be a huge shift. Emerging markets are a huge segment of the population, and we believe that the investment opportunity in these markets is huge

SC: How do you see venture capital changing in the next few years?

MF: First off, I think there's got to be a shakeout. There have been so many new entrants into the industry, and from what we can see, many are sloppy with their investments. And a lot of these people are going to get kicked out.

We may see new regulations. In five years, a lot of people will have lost a lot of money. There's going to be new regulation that raises the bar to be a syndicate organizer or fund manager, and to be an investor.

We also think that the people who are investing now are going to see awesome returns. Now’s a great time to invest, while valuations are down. This is a boom and bust industry — when everybody wants in, you get bad returns; when everyone's running away, you get great returns.

SC: Since you said there is going to be a shakeout, do you have advice for new entrants who want to avoid early mistakes?

MF: Ask a lot of questions of syndicate leads. Ask things like: “Beyond the good deal flow, what about valuation? What are you doing to understand the companies you're investing in?”Ask the syndicators how much of their own money they are investing. If they don't have confidence and faith in their investment, why should you? Make sure that you're comfortable with the investment strategy and process of the person you're working with.

Sydecar is on a mission to bring more efficiency to private markets by standardizing how investment vehicles are created, executed, and managed. By doing so, we will enable thousands of new investors to launch investment vehicles instantaneously, track funding in real-time, and offer hassle-free opportunities for early liquidity. We exist to serve the most passionate and creative individuals as they fund and support world-changing companies.

But we’re not naive enough to believe that we can transform private markets solely by supporting the deal leads, fund managers, and investors who touch our platform directly. We know that transformation of this scale requires that we meet individual investors where they are: in marketplaces, community platforms, communication tools, and banks. All of these businesses – and more importantly, their customers – seek better technology to access the tremendous opportunity that exists within private markets. 

“The old and labor-intensive processes built around 30-year tech stacks [...] will not scale to 100,000+ financial advisers and millions of accredited investors. What’s more, the user experience is so bad, you would not want to scale it: PDFs, manual bank wires and clunky investor portals are the current “state of the art” here."

— Techcrunch, September 2022*

Today, we’re taking a significant step towards our goal of becoming the standard infrastructure for private market transactions. We’re excited to announce our partnership with Stonks, the official home for startup demo days. By integrating with Sydecar’s deal execution platform, Stonks aims to create the world’s fastest checkout flow to invest in startups. This flow allows investors to sign docs, connect their bank account via Plaid, and fund their investment — all in less than 3 minutes. 

“It’s like Stripe Express Checkout for Startup Investing.”

Soon after launching their Demo Day platform, Stonks realized the most powerful aspect of these events was their ability to generate real-time investor excitement about new companies. They saw thousands of angel investors flock to their platform, eager to find the next unicorn. The Stonks team was confident that they would be able to harness that excitement to fund more promising startups (while limiting friction for founders) by facilitating investments through SPVs. The only problem? SPVs can historically take days (or weeks) to create, and there’s quite a bit of friction involved in funneling investors through the signing and funding process. Stonks knew that, in order to fulfill their mission, they needed to create a real-time, low friction “checkout” process for SPVs.

Enter Sydecar. By integrating with Sydecar’s deal execution infrastructure, Stonks can now establish investment entities in real time, onboarding investors, and collect signatures in funds in minutes. Better yet, they’re able to do this all natively within their app, while providing a best-in-class user experience that allows investors to fund immediately while paperwork is handled in the background.

On top of the integration, Stonks has built a number of game-changing features into their Demo Day Vehicle product, including:

• Variable economics by investor, including an early bird discount 

• Shareable, private link for founders to share with their network

• Advanced reporting and analytics for startup accelerators 

  
  

In doing so, they’ve made it easy for any accredited investor to access world class deal flow and removed the headache for early stage founders who are looking to raise from friends, family, and angel investors.
To learn more about Stonks’ new Demo Day Vehicles, check out their recent announcement.

*"The alternative asset class needs new infrastructure — who will build it?" by David Jegen and Abdul Abdirahman. September 14, 2022.

Nik Milanovic never meant to start a venture fund. When he started his newsletter, This Week in Fintech, in 2019, it was just intended to be an internal email to keep his team at Petal to keep them informed about what was going on in their industry. He knew he had a unique, nuanced perspective on the ways that fintech was evolving, but he never saw it as anything monumental or world-changing. He certainly didn’t anticipate it becoming a full-time job.From the start, Nik has focused on building resources that didn’t previously exist for the people who were asking for them. In 2019, that was a newsletter. In 2020, it was an investment syndicate. And in 2022, it’s a $10 million venture fund. We sat down with Nik to learn about his first angel investment, his tips for creating leverage as a solo capitalist, and his legendary fintech happy hours.

What was your first angel investment? What motivated you to start investing?

My first angel investment was in 2018 into a company called Truebird that was building mechanical coffee machines.

The thing about working in startups is that you end up putting all of your time, energy, and focus into one bet. But I wanted to see what other companies’ stories were like and support other founding teams. There are so many great products out there. It was never really about the money, I just wanted to connect with other people working on cool things.

When did you start investing in fintech?

I started a syndicate to invest in fintech in May 2020 and everything took off from there. At the time, I had just transitioned from leading strategy for Petal to working at Google Pay — I’ve always worked in fintech so I’m kind of biased, but there are so many interesting products being built and so many smart people are flocking to the space to build them. Focusing on fintech gives me the best opportunity to connect with smart entrepreneurs and actually be able to speak their language.

What was your process for finding LPs to join your syndicate?

It was a lot of outreach to people I already knew, asking if they wanted to collaborate on angel investing. We didn’t do much to promote it publicly at first, it was pretty private. But there were a lot of word of mouth referrals, and that’s gotten us to over 150 members now. People were just excited about the companies we were investing in and wanted to tell their friends.

That’s impressive growth. Why do LPs love the community you’ve built?

People like collaborating with each other. Of course, they like meeting the entrepreneurs and getting into buzzy rounds, and they get excited when those rounds get followed-on by larger VCs. But more than that, people like reviewing new concepts and then having collaborative conversations about why products are being built and why now is the right time for them to go to market. Whenever we’re reviewing a new company, it’s a highly collaborative process of putting together questions that will challenge the founders and then sharing notes before making an investment decision. Most people in the community work in fintech, but everyone is coming to the conversation with a different perspective, different experiences, and different skill sets — so the conversations that end up happening are really rewarding.

It sounds like a lot of work managing all those conversations between 150 people. What are your tips and tricks for getting the most value out of your investor network as a solo capitalist?

I’m definitely feeling the brunt of it right now after just announcing the Fintech Fund. My inbox is a nightmare. I don’t have any real hacks, but I try to focus on clear communication and transparency over everything else. I find that the more information I share openly with my community, the more people offer to help out with various tasks, organizing events, and supporting portfolio founders.

Finding the right tech stack to enable that communication and transparency has been a huge unlock. We’re using Slack for communication amongst community members, and then obviously Sydecar. It makes it easy for our syndicate members to see what we’re doing, how we’re investing, and what their participation looks like.

What drove your decision to go from syndicating deals to raising and fund and becoming a full time investor?

This opportunity — to invest in the types of companies that we’re investing in, in the places that we’re investing — is massive and the traditional venture model doesn’t do it justice. At the earliest stage, the support that early stage companies need is about so much more than the dollars. There aren’t a lot of options out there to get the support of a massive fintech community like ours that can give you firsthand advice, help you choose between two vendors, or introduce you to your first product hire. Raising a fund will allow us to bring that value to a greater number of founding teams.

What challenges have you faced in the move from syndicating deals with other angels to raising a fund backed by larger funds and institutional LPs?

It’s a different ball game. The expectations are higher around communications, structuring deals, and showing returns. I’m so appreciative of our early backers — people like Sheel Mohnot, Jake Gibson, Jillian Williams, Sriram Krishnan, Stephany Kirkpatrick, and Mike Dudas — they’ve been phenomenally supportive in making this dream a reality. But it’s definitely a more formalized relationship and so having my ducks in a row on things like compliance, tax, and other back office functions is a non-negotiable.

The Fintech Fund’s website says that you invest in defi — what is your approach to investing in crytpo or defi companies and how does it differ from other fintech investments?

We really want the investments we make out of this fund to be grounded in real use cases that are immediately available. There are a lot of great teams out there building for possible, eventual use cases in newer, unproven fields. The right partners for them are ones that have the right risk-tolerance and are excited to back more speculative concepts. For us, we want to prioritize delivering a good and fast return to our LPs. There is some crypto and web3 in the fund, but for the most part, we’re focused on products that have an immediate use case (and active customers) today.

What does your diligence process look like for that? Are you talking to potential customers or subject matter experts?

The community is instrumental in our diligence process. The beauty of what we’ve built is that we don’t often have to go outside of our own community to find someone who has experience in a certain niche of fintech, or who has been a customer of a competitor product. Getting feedback from people who know a space better than I do is so important — it’s not something that I have an ego about.

What gives your community a competitive edge?

I think our happy hours are what makes us really unique. Organizing events all over the world is exhausting, events don’t often have a super high ROI for fundraising or sourcing deals — at least not directly. But everything we do is about building this community, and we heard from the community that people were really missing in-person connection. There’s a lot of serendipity and nuance in in-person events that can’t be captured online.

To date, RaliCap has deployed capital into 50+ startups, focusing on fintech companies in emerging markets. Through capital allocation and a robust community of fintech operators, RaliCap has enabled the growth of companies that are having a truly life-changing impact in Asia, Africa, and Latin America. But RaliCap’s story is not without its roadblocks. In many ways, RaliCap’s founder Hayden Simmons has turned traditional venture capital on its head in order to support overlooked opportunities with immense potential.

Hayden has spent his career helping fintech companies expand into emerging markets. He saw an opportunity to use his expertise to help support founders who were early in their journeys and began angel investing in 2018. He felt fulfilled by the impact he was able to have, and he even started seeing some healthy markups on his investments before too long.

In 2020, RaliCap VC was born. Hayden, still relatively new to the world of venture capital, was overwhelmed by all of the moving pieces he had to align in order to support the founders he was excited about. He compared notes with some friends, in search of a way to get started that was aligned with his goals for the RaliCap community. But, as he looked for answers to many of his questions, he was disappointed by how difficult it was to get started.

After a year of trial and error, Hayden has finally found the answers to many of those questions — and has come up with new solutions where he couldn’t find any. We asked Hayden to share some of what he’s learned over the past year in hopes that it helps new investors who are just starting on their journeys.

Sydecar (SC): What was your thesis when you were launching RaliCap?

Hayden Simmons (HS): RaliCap is very unique in our structure. We use SPVs to deploy capital and have a very low minimum check size. Since the beginning, it’s never been about maximizing AUM. It’s about building our brand and getting the right people in the community — people with experience in the trenches who can really relate and provide value to founders.

SC: When you started RaliCap, what did you see or anticipate about early-stage investing that others might not have seen?

HS: We learned really early that we didn’t want to do the traditional syndicate model. The traditional model is: you find a deal that you want to do, tell the founder that you’re going to do it, and then go back to the community and try to raise money. And then you have to make sure the raise amount is proportional to the SPV fees.

That’s the old-school way. It's a bad experience for the founder who’s having to wait around, and also for the deal lead who’s responsible for hounding LPs to get their wires in on time. We wanted to do things differently, which is why we're leveraging Sydecar's Fund+ structure. Fund+ allows us to raise committed capital and deploy it on a deal-by-deal basis through SPVs. It's the best of both worlds.

SC: What were some of the challenges you faced when getting RaliCap off the ground?

HS: When you’re just starting off, you don’t even know what questions to ask. There’s no playbook that says “here’s how you get your fund off the ground.” For me, it was a process of constant discovery and feeling like I had no idea what I was doing.

Because of our low check sizes, I learned early on that transaction fees were always going to be a constraint for us. You typically want admin fees to be less than 5–10% of the SPV, which meant that smaller SPVs weren’t feasible with some of the providers we talked to at the beginning.

I also learned how important it is to work with a provider that has your back. At RaliCap, we’re often some of the first money into the companies that we’re backing. We’re enabling their core operations and paying their salaries, so our ability to deploy capital efficiently and on time is crucial. We don’t want to be faced with some last-minute banking issue or communications snafu that keeps us from wiring money to a company.

SC: What makes Rally Cap so special?

HS: We're not running your typical syndicate where we jump on deals and push you to squeeze your pockets. We dislike syndicates for this particular reason: incentives between syndicate leads and syndicate investors are misaligned.

Ralicap's SPV strategy comes as a complement to our overall fund strategy where we offer our LPs (and future LPs) value that we know to be unique. It's literally impossible to get direct access to the deals we share — they happen behind closed doors, are incredibly competitive, and, unless you've got $1B in AUM, you can't access them.

The magic bullet for RaliCap is having committed capital to pull from so that we can seed SPVs and then allow LPs to top up their contributions. It’s not just a community where people are passively looking at deals. The real innovation is making sure that investors have skin in the game so that they are more engaged.

SC: When you talk about LP’s having skin in the game and adding real value, what does that actually look like?

HS: People join RaliCap because they want a hands-on touchpoint with founders. Our LPs can help with deal sourcing because they have existing relationships with amazing founders. They can help with due diligence because they’re actually operating in the market. And they can add a ton of value for companies across business development, hiring, pricing strategy, and performance marketing. We’re super intentional about onboarding new community members to ensure that we’re building the best possible support system for our portfolio.

SC: In 2020, you left your job at Facebook to go full-time on RaliCap. What influenced that decision?

HS: I realized that we were consistently getting into quality deals, that our companies were raising follow-on capital, and that founders were finding value in our community. The thesis proved out quickly. And on the other side, our LPs were telling us they wanted to double down and we started to get bigger funds reaching out saying they want to invest in RaliCap. That really gave me confidence that there was enough interest and traction that I could pay myself to do this full-time.

SC: What is your advice to new deal leads who are looking for an SPV partner?

HS: Being able to outsource a lot of the back office was pretty critical. A lot of my early success was possible because I wasn’t spending hours every week thinking about the backend — subscription docs, regulatory filings, tax documents, wrangling LPs to get checks in on time. That would have been a huge distraction for me.

Given our low AUM, how we allocate money and time is really crucial. Sydecar’s flexible pricing is a good fit since we’re deploying smaller check sizes and have to be mindful of fees.

SC: What shifts do you think we’ll see in venture capital over the next few years?

HS: I don’t have a crystal ball, but what I do know is that our model works. I don’t understand how small generalist funds will survive the changes in VC and am confident that doubling down on fintech is the best bet for us. I look back on our marketing messages from a year ago and at the time I was like “who the hell knows if this will work?” Now I realize we were spot on. This grassroots, decentralized community with no overhead really can outperform traditional venture models.