❓Do Syndicate Leads do the job Full Time?

Although being a syndicate lead is often not a full-time role, some have found ways to make it a viable career, side hustle or additive to their existing work. This post will explore different approaches syndicate leads have taken to turn their work into awesome syndicates.

We’ve also received direct feedback from 9 syndicate leads to add color to how they manage running SPV’s as a side hustle. We specifically ask them: 

1. What syndicate leads do full time

2. How much time they spend running SPVs

3. How they got into leading SPVs

Let’s dive into why it can be challenging to run syndicates full time:

The Challenge of Doing Syndicates Full Time

The majority of syndicate leads typically charge 0% management fee and 20% carry on deals they syndicate. This means that there is no cash made upfront for the service/accessing of the deal, rather 100% of the money-making opportunity for the GP lies in the outcome of the deal i.e. the 20% carry portion. In this scenario, a syndicate lead is not going to be able to generate short-term cash to pay rent or whatever expenses one has in their life.

There are syndicate leads who will charge management fees on SPVs; however, that still is unlikely to amount to a typical salary, so even these folks often struggle to make enough immediate income on management fees to lead syndicates this full time.

From what I’ve seen, those who run syndicates full time typically have had some meaningful liquidity event in the past, allowing them to work for the carry upside and not rely on short-term cash. Unfortunately, it’s a true barrier to entry for those wanting to do this full time. That said,  the longer-term carry can become extremely lucrative (at least that’s the plan for me). 

I asked 3 SPV leads how they think about the monetary opportunity of a syndicate which is likely not making much cash. Their responses:

1. Jeroen Bertrams (Partner at DVC) → “I think some people may underestimate the amount of time we put into this work and the limited upside. As mentioned above, we do not get a management fee and we lose our own money if a deal fails. We need to make sure that our LPs make some good money in order to have a good upside ourselves. For leads, it can take many years before they see a return on all their work (if they ever see a return).”

2. Joseph Turner (Partner at Jolt VC) →  “If you don’t enjoy it, and you aren’t learning / getting synergies with other roles, this is not the way to make $$$$ (especially in this market).”

3. Colin Gardiner (Founder of Yonder VC) → “In terms of making money as a syndicate lead, it can be pretty darn hard to bank on exits happening in any short timeframe. I think it's a longevity game and being able to have a reserve to work off or another source of income is important. This also helps to cover the lead commit which if you are doing significant deal volume can really add up.”

Carry is King (for syndicate leads)

The longer-term carry for syndicate leads is going to be similar to a GP at a traditional venture fund as both are typically charging 20% carry. For the fund, it’s 20% carry for the entirety of the fund. For the syndicate leads, it’s 20% carry for each deal they’ve run (in other words, carry is received on a deal by deal basis for syndicate leads).

Of course, a few things that make this an apples to oranges comparison are:

• The fund is the average across all deals in the fund

• SPV’s are deal-by-deal carry, so zero attachment from one investment to the next

• AUM Matters → SPV leads are not typically deploying as much capital as larger funds but that is not always the case. Zach and I together have deployed > $200M over the past few years. That is more capital than the majority of microfunds funds but also nowhere near the amount of the larger funds.

My Personal Story

I started out running syndicates and partnering with other syndicate leads while I was operating at my previous healthcare startup. I had joined the company as the 1st employee and was increasingly interested in startups, and wanted to get involved outside my full time startup role. I also was starting to increasingly meet impressive founders starting new companies and seeing a ton of venture dollars being put to work into these high-risk, high-reward startups.

There was a 1-2 year ramp-up of me starting out writing small angel checks both direct and via SPV’s before I ventured into putting together SPVs myself. By 2019 I was actively sourcing deals and putting together SPV’s myself and with partners. Because I was working FT at my startup, I did not rely or care about cash, moreso getting into high-growth opportunities where the carry could be realized 5-10 years down the line. 

I was increasingly interested in Venture Capital and therefore was continuously trying to build out a portfolio, meet more founders, and build a positive/value-add reputation within the industry. So, I continued this as a side hustle to capitalize on everything mentioned above. 

At the beginning of 2021, my healthcare startup that I had been at about 5 years (dating back to pre-launch) had a liquidity event allowing me to focus on doing SPV’s full time. For transparency, I figured I would do this for a bit to explore either raising a traditional venture fund or starting/joining something else as an operator.

I think it’s safe to say that most folks who get active on running SPV’s have the goal of either raising a fund or joining a fund, but it likely varies. 

I was FT running SPV’s for a full year before deciding to 1) raise a small microfund and 2) get back into advising (which then led to an operating role). I absolutely love running SPV’s and bringing high-quality deals to LPs and capitalizing on upside carry, but there were a few things that made it tough for me to continue heads down on only SPVs.

1. As noted, I was not making any cash. That can be a mental battle while living in NYC or anywhere for that matter while you see your bank account decreasing.

2. I realized I wanted the best of both, 1) operating & 2) investing. I also truly believed that being an investor would make me a better operator, and vice versa. 

3. I’m entrepreneurial and wanted to continue to build. Starting this Newsletter and being part of the team at Hampton are both things that I am passionate about. They also are expanding my skill set. 

4. Even if I was able to raise a fund size that supports me financially, I am not sure that would be the right fit for me personally. Again, I really like the hybrid of investing & operating.  

Leaning into syndicates full time for a full year really provided me a great opportunity to better evaluate what’s the right fit for me.

So, what do other Syndicate Leads do Full Time?

In my years of running syndicates and meeting/collaborating with many other syndicate leads, I typically see them fit into one of the following buckets:

1. VC’s who run SPV’s on the side.

2. Founders/Operators who run SPV’s on the side.

3. Agency Owners who support early-stage founders and run SPV’s on the side.

4. Angel Investors who opportunistically run SPV’s on the side.

There are syndicate leads who do not fall into the aforementioned categories, however it is pretty rare to see.

Let’s dive in.

1) VCs who run SPV’s on the side → These are typically folks who started out running SPV’s and are familiar with the process, therefore once they went on to raise a fund, they opportunistically continue to run SPV’s. These are typical fund managers of micro funds, where running SPV’s is still relevant and allow them to capture more upside on unique deals or doubling down on portfolio companies. Clearly, these folks already have great deal flow, so, in my opinion, this is a great profile to continue running SPV’s and engaging additional LPs in doing so.

Example: Justin Smith runs Recharge Capital, a traditional VC fund, however he was actively doing SPV’s ahead of his fund (and in venture before). He continues to run SPV’s and syndicates deals out to his LP base.

2) Founders/Operators who run SPV’s on the side → These folks typically are somewhat embedded in the startup/VC scene and have strong deal flow via their network. They also likely have great founder relationships who want them on their cap table and therefore putting together SPV’s is a great solution to invest and get involved while also accumulating other LP checks to amount to a larger position on the cap table.

Sometimes these folks will leverage SPV’s as a way to build a track record to eventually go FT in venture capital, but many times it’s a nice way to capitalize on their network/strong deal flow. These individuals already have a FT job so the short-term cash opportunity here is not typically relevant.

Example: Bryan Rosenblatt was running SPV’s while leading a sales team at Reddit. That experience led him to his current role as Partner at Craft Ventures.

3) Agency Owners who support early-stage founders and run SPV’s on the side → most of the folks I’ve talked to here are typically looking to add a “Venture Arm” to their existing agency where they support many founders and have unique access by doing so. They are mostly looking to run SPV’s for 2 reasons:

1. They want to capitalize on their best clients by investing into the business and

2. It enhances their relationship with their clients and highlights a different relationship in believing in them long term (unlike a traditional services for cash model that most agencies use). 

Example: Devon O’Rouke runs Fuvio, a tech product marketing consulting firm. He recently started doing SPV’s as a way to add a venture arm to invest in his favorite companies that he sees as an agency owner.

4) Angel Investors who opportunistically run SPV’s on the side → These folks may already be rich and the management fees of a fund are not necessary for them. As angel investors, they clearly are actively investing into startups and will have strong dealflow. Running SPV’s on the side allows them to write bigger checks into companies which the founder may like, but also allows them to engage with an LP base who genuinely might be interested in participating in some of the deals these angels are doing. 

Many times these angels might have had massive successes and therefore there’s strong demand from their network to participate in deals they have unique access to.

Example: Martin Tobias runs Incisive Ventures (syndicate & fund). He was at Microsoft in the 90’s and made a bunch of money, which led to angel investing and then VC. He also started Loudeye Technology and took it public leading to more money. After he made money he focused on angel investing, which then led to running his syndicate, Incisive Ventures.

To round out this week's post, we thought it would be awesome to loop in a few other syndicate leads to share more details on what else they do, how they got into SPV’s, and an estimated amount of time they put into syndicates.

We interviewed syndicate leads across the map from Radiologists to growth roles at Ramp to CFO’s at Biotech companies to Agency Owners to folks who run Venture Funds.

Q&A Below.

1. What do you do outside of running SPV’s?

Jeroen Bertrams: Doing SPVs almost full time at the moment. While the number of deals is down a lot, I still spend lots of time chatting with founders, helping portfolio companies and trying to find the right deals; next to SPVs I do some direct investments as well and I'm writing a new book :)

Devon O’Rourke: I founded and run a tech product marketing consulting firm, Fluvio. We're the firm tech companies turn to with their most strategic, critical go-to-market challenges. We have worked with the likes of Amplitude, Stack Overflow, ABC Fitness, Moneylion, Nasdaq, eBay, G2, and many more.

Yash Godiwala: I work on Growth Product at Ramp.com, NYC's fastest growing startup. Through leveraging data, high-quality engineering, and a velocity-first framework, our team builds software that generates bottom-line revenue.

Justin Smith: I run venture investments at Recharge Capital, a thematic asset manager focused on global innovation in fintech and healthcare through a blend of private equity and venture capital strategies.

Joseph Turner: CFO for growth companies across deep-tech.

Bradley Mullen: I've been a radiologist for 15 years and it is the perfect specialty for a physician interested in the intersection of medicine and technology. Radiology is one of the specialties pushing the bounds of technology in medicine, beginning with the earliest adoption of fully digital information systems, later voice recognition, and now moving into some of the most mature uses of AI in medicine at the moment.

Elana Dickman: Outside of running SPVs for Red Beard Ventures, I also manage Red Beard Ventures Fund I which is a full-stack web3 fund investing across blockchain consumer applications, infrastructure, gaming, the metaverse, and DeFI, in both equity and tokens. I also spend a lot of time on our tokenomics accelerator Denarii Labs, which is in partnership with Horizen Labs Ventures and Red Beard Ventures. I am also the co-founder of The Girls Table a social media platform that amplifies entrepreneurs, creators, and investor's voices through a podcast, newsletter, IRL events, and a private chat. 

Matthew Wilson: I never intended to make Allied a full-time job, but it's how things worked out as a result of the pandemic. When I'm not running an active SPV, I spend most of my day networking with founders and other investors––you never know where the next great opportunity will come from. If it's a super slow day at the office, you can find me on the bike trails or ski slopes.

Colin Gardiner: Outside of running SPVs I spend all my time advising and consulting marketplaces and platforms. I am a marketplace geek and try to write as much as possible about them at gardinercolin.com. Working and writing about marketplaces is also my largest source of deal flow as founders come to me for help and advice. I am creating a new SaaS product for marketplaces/platforms called Longtail that allows them to create 100-1000s of SEO pages in days vs months.

2. How much time would you estimate you allocate in running SPV’s? 

Jeroen Bertrams: It depends a lot on the general fundraising climate. Currently, the number of deals is significantly less than before. Time spent is different now. Less time actually running SPVs, more time spent on dealflow and deal evaluation.

Devon O’Rourke: I would separate my answer into direct vs indirect allocation. By operating Fluvio, I am indirectly committing time to LP relationship generation and SVP opportunity sourcing (with startups we work with as a consultancy). Direct SPV management takes less than 5 hours a week, but I am early in this journey.

Yash Godiwala: Managing dealflow as a whole likely takes less than ~2 hours/week, but the admin with each individual SPV likely takes up 5hrs/week during the 'crunch time' of the SPV (first two weeks, last two weeks).

Justin Smith: We run a few SPVs per year. Most of these co-investments are focused on startups that sell and distribute into the ecosystems we control with our private equity vehicles that are acquiring and operating businesses within fertility and mortgage servicing.

Joseph Turner: 10-15 hours per week

Bradley Mullen: The amount of time I put into GP-ing varies but since I "have a day job," I have to be extremely selective about which companies to run and I focus mostly on healthcare and biotech and sometimes hard-tech or medical device. I have created an efficient process for sorting which involves automatically discarding anything off-thesis and then trying to get a decent feel for where the company is at before I take a meeting. 

Elana Dickman: We are a very small team, and I would say between writing deal memos, sourcing deals, talking with companies, and doing portfolio management I spend at least 25 hours a week on the syndicate

Matthew Wilson: My goal is to add 4-6 new companies to the Allied portfolio each year. For each deal, I spend 50-100 hours on sourcing, diligence, writing the deal memo, LP calls, and helping the founder with investor introductions. I do my best to operate with the diligence & discipline of a top-tier VC firm yet with the flexibility of a syndicate. With each deal, I aim to provide LPs with all of the same information I would want as an investor trying to make an informed decision.

Colin Gardiner: It highly depends on if there are deals happening or not but typically about 10% of my time is spent on the whole process of sourcing, assessing, managing and finishing the deals. Some nights and weekends get spent on it.

3. How did you get into the world of SPVs? 

Jeroen Bertrams: I started investing into SPVs as an LP first; at some point I decided to bring some deals to the platform and that went quite well

Devon O’Rourke: I started investing as an angel investor - some direct and others via syndicates. I realized that my business had some really interesting synergies with early-stage investing and set up Fluvio Ventures.

Yash Godiwala: I dropped out of school in late 2020 and moved to SF and despite the tailwinds of COVID, found that the San Francisco tech scene was incredibly alive. I was surrounded by talented founders, many of which I wanted to support and join for their ride. I made my first angel investment in January of 2021, started growing a network and built a list of other angels that wanted to join in—and in the fall of 2021, it made sense to build a structured syndicate through AngelList. 

Justin Smith: As a career investor I ran my first SPV in 2016 and learned the ins and outs of sourcing, storytelling, underwriting, raising capital, and building relationships with both entrepreneurs and limited partners. 

Joseph Turner: started out as an angel investor

Bradley Mullen: I have been an investor in alternatives for 10 years - commercial real estate and debt but 3 years ago when my sister (head of branding for a Global 500 company) was asked to be a mentor for Techstars she told me about a few of her startups. I thought - wow startup investing is something I know nothing about - and dove in head first. Since then, I have made over 100 investments as an angel and learned everything I could by reading 1,000s of memos, decks, listening to podcasts (All-in, 20VC, more), reading as much as possible as well as the power of networking with countless founders, LPs, and other investors.

Elana Dickman: I started Angel Investing in companies such as Carta, SpaceX, Alt, Atoms, and about 10 others through syndicates. I met with Drew Austin, the founding partner of Red Beard Ventures, and started sourcing companies for him on the side. After about 2 months of bringing in some of the top deal flow, he brought me on full-time to help raise our first fund and run the syndicate. 

Matthew Wilson: I previously built and sold a CPG company in 2012 and started angel investing as a hobby. I initially leveraged my sales & marketing background to help founders with their GTM strategies but quickly realized most of them struggled to connect with investors and raise capital, so I switched to fundraising and started connecting founders with investors in my network. By 2017, when I wanted to get more formally into VC, every GP I spoke to recommended getting an MBA, so I returned to business school. When I graduated in Spring 2020, I thought I'd work at a VC firm for several years before starting my own, but it was the height of covid. The entire world was shutting down and no one was hiring, so I decided to go all-in on Allied and let the chips fall where they may. Three years later, we've deployed over $5M across 15 portfolio companies, and Allied is one of the largest angel syndicates in Canada.

Colin Gardiner: I got into when a company I was advising started raising a round and I wanted to participate. The problem was that my check size just wasn't that meaningful and I wanted to contribute more outside of investor introductions. A friend told me about SPVs and AngelList and I was off to the races. I had so much fun with the first one that I started my second one before the first was closed!

That’s all for this week. If you’ve heard other stories of syndicate leads who either run SPV’s full time or have cool stories of what else they do FT, we’d love to hear from you!

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✍️ Written by Zachary and Alex