A new pooled funds investment syndicate model called Aussie Angels has been launched by Cheryl Mack
Mack said she saw a gap in the market in terms of how much time, money and effort was required to start a startup investment syndicate.
While there are syndicate groups run by venture capitals such as Investible and Steve Baxter’s TEN13, as well as several angel investments groups in the major capitals and regional areas, Mack said she was keen to create a more democratic model for investing.
As an angel, I kept running into the situation where other Angels in my network were asking how I got into a deal, and how they could get in as well. I didn’t have a good answer or solution for them.” she said.
“So I started looking into making an official syndicate they could join. That’s when I realised how much time, money and effort was required. Then during this process I came upon the concept of building it in a way that everyone could also use the structured I was creating. I figure if I’m going to build it for myself, I may as well spend a bit extra time & money and build it for everyone as well.””By doing it this way, I’ve made a $50,000 problem of setting up a syndicate free.”
Because angel investing can be time consuming and complex, syndicate investing has been a growing trend.
“The problem we’re solving is that although 16% of the Australian population could qualify as a sophisticated investor and invest in startups, many simply aren’t able to access this asset class. Either they don’t have access to good deal flow or they don’t want to risk a large amount,” Mack said.
“Most startups will have a minimum cheque size in a pre-seed round of $25k-$50k or $100k+ in a seed or above round. By participating in the deal via a syndicate, investors may be able to put in a smaller amount and thus be able to better diversify their portfolio.”
Syndicate leads on Aussie Angels can set the minimum cheque size for a deal as low as $1,000.
“We’re making angel investing more accessible to Australians. We’re on a mission to democratise angel investing,” Mack said
“For angel investors, particularly new investors who are hoping to get into this asset class, we’re solving the problem of accessing quality deal flow. Many Angels are doing so part-time on the side of their full-time gig, they don’t have a lot of time to seek out and meet startup founders, or do the due diligence on companies. But getting into top startup rounds can make or break an Angels portfolio.”
“Lead investors typically have strong networks and are able to get into investment opportunities that others wouldn’t, including deals that are highly-competitive or only shared within private angel referrals. By being part of a lead investors syndicate, investors can get access to these private deals.”
How it works
There is no cost to join a syndicate, and there’s no commitment to invest required either. Investors will be invited to view the deal note of the company the lead is investing in and determine whether they want to invest as well, on a deal-by-deal basis.
If they invest, investors share the cost of setup and management for the deal proportionally between them.
“Aussie Angels syndicates allow investors to participate in a lead investor’s deals. In exchange, investors pay the lead carry,” Mack said.
“Angel investors simply need to visit the syndicates directory page on our website to find a list of all the syndicates they can join. They can review that syndicate’s thesis and apply to join ones that resonate with the investors values and areas of interest.
“Once the investor has been approved to join the syndicate by the lead, they’ll be notified when the syndicate lead is investing in a company and have the opportunity to invest alongside them into that startup.”
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