What Really Drives Success as a Syndicate GP

Running a syndicate is often dismissed as a stepping stone—something you do before raising a "real" fund. But the truth is more nuanced. Syndicate leads operate under fundamentally different incentives than traditional fund managers, and understanding these incentives is essential for anyone considering this path or evaluating syndicate opportunities as an LP.

The syndicate model isn't just an alternative to traditional venture capital. It's a distinct approach with its own strategic logic and its own path to building wealth.

Volume Isn't Vanity—It's Strategy

One of the first things that surprises people about running a successful syndicate is the sheer volume of deals you need to run/present to your LPs. This is a direct response to how LPs engage with syndicate opportunities.

Unlike a traditional fund where LPs commit capital upfront, syndicate LPs make individual investment decisions on each deal. And here's the reality: most LPs will pass on most deals. An LP might pass because the check size doesn't fit, the sector falls outside their expertise, or they've already deployed their allocation for the quarter/year etc.

If you only send one or two deals per quarter, you're asking your LPs to remember you exist with minimal touchpoints in my opinion. But if you're consistently surfacing interesting opportunities, you become a regular part of their deal flow ecosystem. Volume is really about maintaining relevance and providing your LPs with the optionality they signed up for. Again, signing up for a syndicate is different from backing a venture fund and of course not every LP views this the same way.

Deal Flow & Quality Is Your Brand

Of course, volume without quality is a recipe for disaster and builds a weak brand over time. As I always say, every deal you share is a brand-building moment.

When you send a deal, you're making an implicit statement about your judgment and your ability to source differentiated opportunities. Send a few mediocre deals in a row, and LPs start to tune out. They stop opening your emails. I’ve been this person as an LP to many other syndicates.

The best syndicate leads understand they're in a constant audition. Every opportunity needs to demonstrate access to deals LPs couldn't easily find on their own, with genuine potential for outsized returns.

You need enough deals to keep LPs engaged, but each must meet a quality bar that protects your reputation. The syndicate leads who get this right develop a reputation over time—LPs come to trust that when a deal hits their inbox, it's worth reviewing and putting time into.

Carried Interest: Why Outcomes Matter More Than Assets

Here's where the syndicate model diverges most from traditional fund management.

Traditional fund managers make money two ways: management fees (typically 2% annually) and carried interest (usually 20% of profits). For established managers, fees alone can be lucrative—a $200 million fund generates $4 million per year before a single exit. This creates incentives to grow AUM, sometimes at the expense of returns.

Syndicate leads don't have this luxury. There are no substantial management fees. The economics are almost entirely driven by carried interest, meaning you only make meaningful money when investments actually perform. Many syndicate leads do take management fees but they vary and it's on a deal-by-deal basis, so while management fees may be lucrative for a syndicate lead, I do not think they are the way to “get rich” or “make it” for any syndicate lead I've come across. 

Finding the breakout winners matters in a way that might not be true for a fund manager collecting comfortable fees (of course, future fund problems will arise here). Your time, reputation, and financial future are tied directly to outcomes.

Similar to a venture fund, you can be wrong the vast majority of the time and be just fine, but you need to find those big winners or those fund returners to make any real money. AUM is nice and can be important but outcomes are what matters. 

What LPs Actually Want

Most syndicate LPs specifically want the optionality the syndicate model provides for investment decisions. Unlike venture fund LPs, they've chosen syndicates because they want to see individual deals and make their own decisions, and in many cases, these folks cannot afford an LP position in an institutional fund. They want quantity—not to invest in everything, but to have freedom to pick and choose, and perhaps learn along the way (like I did).

LPs typically aren't frustrated when you send deals they pass on. They expect to pass on most deals. What frustrates them is when you don't send enough quality opportunities to make backing the syndicate worthwhile.

The Outlier Game

In some ways, syndicate leads are playing the same game as traditional VCs. The math requires outliers. Most investments will return little or nothing. A handful might return 2-3x. But the real money comes from rare investments that return 20x, 50x or 100x+.

This is the ultimate measure of success. Are you finding companies with genuine breakout potential? Are you building a portfolio where winners can compensate for inevitable losers? This matters for venture funds and this sure as hell matters for syndicate leads too.

Track Record 

Your track record will be evaluated differently by different LPs because they have exposure to different subsets of your deals. In a traditional fund, everyone gets the same returns. In a syndicate, one LP might have invested in your biggest winners while another participated only in deals that went sideways.

This has implications: you need to think about track record communication differently, helping LPs understand deals offered versus deals they participated in. Some LPs will inevitably be luckier based on which deals they chose—this is inherent to the model.

This highlights why volume and quality both matter. The more high-quality deals you offer, the more opportunities each LP has to build a diversified portfolio within your syndicate and again, allows for investment decision making in the hands of the LP at the deal level. 

The Path Forward

Running a syndicate has its own strategic logic and the potential for building lasting wealth.

The syndicate leads who will succeed understand their incentive structure and LP interests. They run deals at scale to keep LPs engaged. They maintain rigorous quality standards because their brand is shaped with every deal. They keep a sharp focus on outcomes because carried interest is where the wealth is earned. And they play the long game (similar to a traditional venture fund) knowing that finding outliers separates success from failure.

Disclaimer: The information provided in this newsletter is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The discussion of potential IPO candidates, valuations, and market conditions reflects publicly available information and should not be interpreted as a recommendation to buy, sell, or hold any securities. Past performance is not indicative of future results, and investing in IPOs and private companies involves significant risk, including the potential loss of principal. Readers should consult with a qualified financial advisor before making any investment decisions.

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✍️ Written by Zachary and Alex