Silicon Valley based world’s one of the biggest platform for venture capital, Angel List has decided to launch their unique VC funding program called ‘Syndicates’ in India. They have roped in serial investor Utsav Somani to lead the Indian chapter of Syndicates and open up a new world of opportunities for Indian entrepreneurs.
In a blog post, Utsav shared this news, as he described his role: “My role will consist of opening dialogue with government officials and regulators with suggestions that’ll benefit startups and investors in India. I’ll map out the Indian regulatory framework so AngelList can come in with their pop-up VC structure that enables venture investing online at scale.”
Earlier, Utsav headed Delhi chapter for LetsVenture, an India based platform for VCs and entrepreneurs.
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What Is A Syndicate?
In the world of venture capital and startups, a Syndicate is specialized VC fund created for a single investment. Various investors can come together and pool in some capital to allow the Syndicate to invest in one particular startup.
A Syndicate lead is assigned for that group, which leads the investments and negotiations and ensure that the Syndicate’s regulations are not broken.
Often investors from competing startups can be part of one Syndicate, besides financial institutions and other VC platforms.
As of now, AngelList has 200+ active syndicates on their platform, and together they have invested $355 million in various startups. A typical investment being arranged on AngelList is anything between $200,000 to $350,000.
Here are some active Syndicates on AngelList’s platform as of now.
Example Of Syndicate’s Working
Assume that an angel investor wants to invest $250,000 into a startup for scaling up their operations. He can personally invest only $50,000 due to limitations.
Now, he can bring together 10 other investors and form a Syndicate so that the remaining $200,000 is arranged. Once such a Syndicate is created, the whole fund would be diverted into a separate company (normally LLC in US), which will invest in that startup.
The Syndicate lead can earn additional capital gains in terms of interests and equity, meanwhile the founders of that startup have the right to choose distribution of profits and also choose which investors can have access to confidential information.
AngelList will charge 5% on all deals which are carried over by the Syndicates on their platform, and in return, they will handle every aspect of that Syndicate for lifetime, which includes legal operations, taxes, documents, accounting and liquidity events.
Here is a list of active Indian investors on AngelList’s platform.
It would be interesting to watch how AngelList is able to bring together various investors, entrepreneurs and regulatory bodies into one platform, and help the Indian startup eco-system to grow and nurture.