Syndicates have grown into being one of the most effective Investment Crowdfunding tools around the nation
Companies have raised over $2B via online Syndication so far nationwide. We are making that happen in North Carolina.
A Syndicate is a group of individuals or organizations combined to promote some common interest. Startup investor syndicates have a common interest in investing in particular types of startup deals. Syndicates pool capital from multiple accredited investors into a single fund, which then invests in the startup.
Syndicates allow accredited investors to fund startups brought to the platform by Syndicate Leads – experienced angel investors who have vetted the target investment and are investing their own money in deals, which demonstrates their confidence in the investment’s potential.
Syndication is the new wave of private investing for investors and here’s just a few reasons why:
- Lower minimums per deal
- Easier access / Leverages tech to simplify the process
- Tailored investor preferences
Whether you prefer IoT, FinTech, AgTech, SaaS, Health/MedTech, Veteran Owned Businesses, University spinout companies, regional startups, or other market sectors, the rapidly growing NC economy provides a variety of companies with innovative solutions that are disrupting industries and creating ROI for investors. Due to new rules and regulations around Investment Crowdfunding, now all investors can access potential private market returns and syndication provides one method for accredited investors to gain access. Online Syndication is relatively new to NC, but we are laying the foundation for entrepreneurs and investors to work together in a more effective way to provide funding. When entrepreneurs get funding more quickly, then investors may also benefit because it means entrepreneurs have more time to grow the business.
See what’s new for NC Syndicates
Investing can be easier. Modern tech makes it more convenient than ever for investors to find deals and for entrepreneurs to source capital. Better yet, investors can find deals locally. Want to learn more? Email firstname.lastname@example.org and request the Syndicate FAQs.
What is a Venture Studio? Learn more about UNBoxed Venture Studio and then request to join the Syndicate with your free investor account. How can the UNBoxed Community aid you?
Something new is coming soon. Stayed tuned!
What are the advantages of Syndication for investors?
Around 8.2% of the US family households are accredited, but when polled, ~90% of accredited households don’t know they can invest in this way, even though the opportunity may exist locally. Syndicates allow newer investors ACCESS to invest alongside experience investors with lower barriers to entry which INCREASES ACCESS to CAPITAL for entrepreneurs.
- Investors get good deal flow
- Minimums are typically around $3 to 5K and sometimes as low as $1K which allows investors to diversify
What are the advantages of Syndication for entrepreneurs?
Startups raise more money more efficiently. Startups…
- Get the supervision of a Lead who is bringing along a good size potential investment from the syndicate.
- Get access to the syndicate investors’ networks and expertise.
- Can easily manage the financials and cap table through a Special Purpose Vehicle (SPV) fund that invests in their startup, rather than adding many small investors to their cap table.
A Syndicate is a group of individuals or organizations combined to promote some common interest. Startup investor syndicates have a common interest in investing in particular types of startup deals.
Syndicates pool capital from multiple accredited investors into a single fund, which then invests in the startup.
Startup investor syndicates have been successfully implemented on AngelList and other investment platforms. The Syndicates allow accredited investors to fund startups brought to the platform by Syndicate Leads – experienced angel investors who have vetted the target investment and are investing their own money in deals, which demonstrates their confidence in the investment’s potential.
Examples of potential North Carolina syndicates would be groups of investors with interest and expertise for investing in companies in sectors such as IoT, FinTech, AgTech, SaaS, Health/MedTech, Veteran Owned Businesses, University spinout companies, regional startups, and other market sectors.
What is a CrowdfundNC Syndicate?
A CrowdfundNC syndicate is an easier way for angel investors to find and invest in well qualified startups, and for startups to find well qualified angel investors, advisors, and mentors. We use a modern, ‘virtual angel group’ model to achieve this. In this model, accredited investors that belong to the syndicate decide on a deal by deal basis when to invest in the startups presented to the syndicate. There can be a different group of angel investors that invest in the dedicated fund created for each deal, but they are all members of the syndicate.
Syndicates are set up by Syndicate Managers using the syndicates section of the Localstake Marketplace platform devoted to the communication and transactions that occur for the syndicates. These include presenting deals, inviting angel investors to join the syndicate, and communicating with syndicate members.
The Syndicate Manager and a qualified Lead investor, along with any other syndicate members who are chosen by the Manager and Lead to help, vet the startups and help them create a quality offering on the Localstake platform. The offering is then presented to the Syndicate Investors for review and investment.
A Special Purpose Vehicle (SPV) fund is created by Localstake to aggregate the angel investments. Investor funds are stored in escrow until the minimum amount specified in the offering is raised, and then the SPV fund invests in the startup.
What is the problem?
Since Regulation D was first launched, it has been possible, but very difficult and time consuming, for early stage startups to find qualified investors, and for accredited investors to find promising startups. Up until recently, that has been done offline in inefficient and time-consuming ways like networking meetings, referrals within investor networks, pitch sessions, follow up due diligence meetings, and so on.
Who has the problem?
Very few accredited investors have the time or energy to invest in this asset class, and many promising startups have gone unfunded or seriously underfunded. Just ask any CEO of a startup how much time they spend fundraising instead of growing their business, or ask any serious angel investor about how much time it takes to find and vet a promising opportunity.
How do CrowdfundNC Syndicates solve it?
CrowdfundNC syndicates solve the problem of raising early stage capital by using an online investment platform, a proven SPV (Special Purpose Vehicle) model, good communication tools, and solid data analytics that make it far easier and faster for angel investors to work together to find and vet great startups and pool their mentoring and financial resources to help those startups succeed.
CrowdfundNC syndicates allow much of the time consuming work to be done online in a more efficient manner. And instead of an investor pooled fund that is invested by the vote of the members, each angel investor gets to decide which of the offerings to invest in on a company by company basis. The best online offerings allow angel investors to do the due diligence online, while still communicating with other investors in the syndicate and with the syndicate Lead and startup management with any questions or issues using the communications tools on the platform.
LiveVested, LLC dba CrowdfundNC (“CrowdfundNC”) acts as the Syndicate/Fund Advisor and creates a dedicated LLC Special Purpose Vehicle (SPV) (a series within a series LLC) for that particular offering from that particular company. All interested angel investors in the syndicate invest in the SPV, and the SPV invests in the company. With CrowdfundNC Syndicates, we create a unique fund and a ‘Virtual Angel Group’ for each offering.
For example, a syndicate focused on IoT could syndicate multiple IoT companies, and syndicate investors would choose which SPVs to invest in for diversification across IoT companies. Likewise, if somebody wanted to invest in companies who use business to do public good, Lead investors from the syndicate would bring the best of the public benefit corps or companies with similar conscious capital charters, and syndicate investors would choose which ones to support.
Can Angel Groups Use CrowdfundNC Syndicates?
Yes. Angel groups are looking for ways to automate their investment process, and the Syndicates section of the Localstake Marketplace platform is a great way for them to do that. Angel groups can create and manage their own syndicate online, and also use their vetting process to act as the Lead investor for syndicate deals. Managing the whole investment process on the Localstake platform will make the job of finding, vetting, presenting, and financing great startup opportunities easier that ever before. And in addition, after giving their own syndicate members the opportunity to invest, they can then open up the opportunity to other syndicates and investors on the platform to help fill out a round. Please contact us if your angel group is interested in setting up a Syndicate.
For the full Syndicate FAQs, please email email@example.com.