Amidst the sound and fury spurred by AngleList’s announcement of its new Syndicate, commentators missed an important reality: Angel Syndicators may now have the financial wherewithal to lead financings, but in most instances they lack the time, interest and/or experience to actually do the work of a lead investor. Fred Wilson points out the challenge ahead for Angel Syndicators:
they will have to learn to lead and lead well. They will have to step up before anyone else does. They will have to negotiate price and terms. They will have to sit on boards. They will have to help get the next round done. Essentially they will have to work. That’s why they are getting carry from the syndicate, after all.
What Fred doesn’t call out is that most angels have no intention do this. High profile angels like Dave Morin and Jason Calacanis have day jobs as startup founders, and generally lack the interest, but in any event certainly lack the time, for all the “dirty work” of being a lead investor. Another category of Syndicators is scrappy hustlers who are building a following because they uncover great deals; but these angels generally lack the experience to be a lead investor. As a consequence, what will happen is angel syndicators may “lead” rounds, but nobody will effectively fill the role of a “lead investor.” Keith Rabois hit the nail on the head, tweeting: “Raising money via a “party round” is still a bad idea. AngelList syndicates don’t fix that.” What does fix this is for AngelList Syndicators to partner with full time seed investors who are willing and able to be good lead investors.
So I’d like to make this proposal to AngelList syndicators out there: if you think you have a great seed deal you want your syndicate to participate in, but you don’t care to negotiate the terms, get the deal papered, and then commit the time and energy to being lead investor up through the Series A, give me a holler. If I like the deal too, I’ll do all that, and ensure your syndicate gets to participate.