PART II: Learnings from pioneering LP syndicates
(i) Deal-making lifecycle, (ii) waiting around, (iii) scarcity, (iv) lies, (v) friyay!, (vi) learn-by-syndicating and (vii) consistency
Once again, as we close another syndicate here at EUVC, here are my core learnings from raising our second EUVC LP Syndicate. As usual, I’m a strong believer that many of these learnings are transferable for emerging GPs (and in this case, founders as well).
🤫pssst… sometimes we have some stealth LP syndicate fundraises happening over the counter; drop me a dm if interested. They are hot, quick & dirty.
It ain’t over till it’s over
Don’t wait around
The feeling of scarcity, comes from….. scarcity, duh!
Don’t freaking lie
Don’t call during the weekend
Learn-by-syndicating
On North Stars & consistency
What brings us together?
🤝 Building network and relationships across Europe
📖 Gain insights, access to best practices & develop skills
🤑 To get exposure & access to the asset class that we all love
Seems that the opportunity to get connected to the best European venture investors while reaping LP returns is a pretty good combination 💡
1. It ain’t over till it’s over
It feels obvious I know 🤦. But hey, we learn by getting things wrong. Let me put it like this, don’t assume it’s a done deal unless it’s effectively a done deal. From committing to the deal, signing all the docs, doing KYC and transferring the money, a lot of 💩 can happen when onboarding syndicate investors. Often times, without fault of any of the parties involved, things might not go through the first time.
To add to it, people naturally tend to put in extra effort in the beginning of any project. And, as time goes by, we relax, let things slide and deadlines slip. Typical project management concepts apply to syndication. And I’ve fallen victim of overlooking them. Hopefully never again.
2. But don’t wait around
The above means you need to wait a bit and allow for some mistakes and admin “do-overs” ⏱. This does feel like the opposite to engineering FOMO tip I’ve shared in my previous post.
I believe the best approach is this fine balance between the two. Don’t wait around for people to go from expression of interest to commit to money in the bank, but do give them enough time to go through the (often painstaking) admin and onboarding processes.
Again, it all comes down to the maturity level of your investment club/syndicate, as well as to what you’re optimising for.
At EUVC for each syndicate we optimise for value add 💥. Similarly, at the macro level we are optimising for volume over size. Meaning, we adversely select unresponsive, low value add and slow investors.
3. The feeling of scarcity, comes from….. scarcity, duh!
This one is just plain common sense. Never, seriously never 🚫, market a deal as access constrained and oversubscribed if it’s not the case. Short term thinking rarely comes with much gains for either side of the table.
One day, I received this message:
Would I be able to 100% confirm you and have you wire in the next 2 days if we can give you the allocation?
Me:
[🦗]
A couple of weeks later:
We might have an opening and I should be able to invite you today if you confirm your interest.
Me:
[🤭]btw, almost two months later the deal is still fundraising
Learning: don’t fake scarcity or access constraints. Smart people can always see through it.
4. Don’t freaking lie
This one is super connected to the above. A couple of months ago I get pitched an allocation in a hot 🔥 deal (FYI it's a syndicate), but I needed to move quick.
Lo and behold, my co-founder gets pitched the EXACT SAME opportunity. More than 10 days after...
Not only does this hinder trust it paints a really bad picture for everyone else leading syndicates and the VC ecosystem as a whole.
5. Don’t call during the weekend
So… again. This is one of those that sounds stupid AF. But for our Startup Wise Guys deal I made the silly mistake of calling the capital of our investors on a Friday morning; without realising that the deadline was automatically set for Sunday 🤦♂️.
Replies like this followed:
Hi David
Ive seen swg capital call with deadline on 16 Oct
- I think that 2-3 days is a super short ddl
- I wont be able to do that by the end of sunday since my bank doesnt do transfers during weekends
Whats the “real” deadline here? Monday? Tuesday?
Well, this is annoying. Not only I’ve created a non-value add interaction with an investor, he’s now questioning how transparent/honest we are about the deadlines. Huge 💩 show. Anyway, dealt with it by explaining it was an automatic deadline and apologised for the inconvenience. Stupid mistake….
6. Syndicates are a great way to learn
We recently launched an episode with our dear friend Romain from Satgana (first close recently announced 🎉).
Romain is a super cool dude and a great friend of
. The episode ended with a quite cool short chat about how syndicates can be a great way for an emerging manager to fine tune strategy, thesis and learn about investors/LP appetite. Launching and running an angel syndicate is kind of the simplest form of a VC firm. At least, it’s the easiest place to start. Loved it. Check it out 👂 below:7. Staying true to your North Star
In one of our most recent episodes we had the pleasure of hosting a legend in VC: Reshma from Seedcamp. Reshma took us through the ins and outs of Seedcamp and highlighted an incredibly simple but powerful concept.
Having a North Star and staying true to it. In our conversation (which you can listen to 👇) that kind of evolved to the concept of being consistent in everything we do.
Reshma went on to explain what this meant for deal making, operations, fundraising, community management, etc. A couple of messages really resonated with me:
Deal making: focusing on deal 100% aligned with your North Star; nothing else
Fundraising: only accept LPs that get your North Star
This for me was a great validation point to simply kick/ban a couple of investors in our syndicate who are…… to be honest: assholes. These are, easily, 10 year long relationships. No point in having idiots bothering you for that long.
What brings us together?
🤝 Building network and relationships across Europe
📖 Gain insights, access to best practices & develop skills
🤑 To get exposure & access to the asset class that we all love
Seems that the opportunity to get connected to the best European venture investors while reaping LP returns is a pretty good combination 💡
Brilliant piece !!!