Angel List (which match makes between angel investors, potential investments they might make in startup companies, and jobs at startups) launched Syndicates at the end of September. There were a couple of weeks in October where the investment community in the Valley talked about nothing else.

Syndicates make it much easier for an individual investor to gather a coterie of like minded investors who want to follow his lead, and for that individual to earn 10-20% of the profit on the fund that he generates as 'carry'.

There have been a respectable number of syndicates established since - it's too early to tell what the outcomes are likely to be - angel investing is a long game, since the average time to exit is 7 years or so.

Tim Ferris and Jason Calcanis were the launch candidates for syndicates, raising about $300K each in the first week. Think of it as professional grade Kickstarter, for accredited investors.

Adding reference to Hunter Walk's post - he'd like to see syndicates to fund: international deals; bundling expertise; alternative liquidity outcomes. In other words, using Angel List to organize the mechanics of putting a fund together, increasing the leverage an individual investor can have.

from Dan Primack's newsletter...

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** I've been in the Bay Area for less than 24 hours, and already I've had four different conversations with VCs about AngelList. In short, it's a combination of shock and awe.

Now comes word that Foundry Group has become the first traditional VC firm to launch an AngelList syndicate. It's $2.5 million in total ($50k into 50 companies), with Foundry's cornerstone commitment coming out of its general fund.

This will be seed deals, but I do have to wonder if AngelList syndicates ultimately are going to be used for the types of Series A deals that firms like Foundry focus on. And, if so, AngelList could be disruptive to much more than just the historical angel group and the more recent spate of micro-VC funds. I think that's why so many VCs seem nervous.

I asked the Foundry guys a bit about this, and here was partner Jason Mendelson's reply:

"I think that it's possible they go into Series A fundings. I think the verdict is still "out" on how much help" syndicates will be to entrepreneurs versus VCs. I think most VCs, despite their marketing efforts, don't help out entrepreneurs very much, so for these firms I do think it will disrupt the market. For VCs that have real reputations for helping entrepreneurs, I think there will be much less change.

As for fund structure, technically LPs could do better with a structure like this is all goes well. AngelList is not only no fee / no carry to the syndicate leader, but gives back carry giving our investors a potential larger return. It's all very early. We'll see what happens, but we definitely wanted to be involved here."

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References

https://angel.co/syndicates

http://www.feld.com/wp/archives/2013/10/launching-fg-angels-to-make-inve...
http://www.feld.com/wp/archives/2013/10/angellist-syndicate-update-week-...

http://techcrunch.com/2013/09/30/angellist-syndicates-by-the-numbers-12-...

http://www.bothsidesofthetable.com/2013/09/29/is-angellist-syndicates-re...

http://blog.betaworks.com/post/63459227729/openbeta-syndicates-two-weeks-in

http://hunterwalk.com/2013/11/20/three-types-of-angellist-syndicates-id-...

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