Tobin Arthur • December 27, 2017

AngelMD is building a new, quantitative model for early-stage healthcare investing. Our model involves democratizing the investment process to create distinct informational advantages for both individuals and syndicate leaders when evaluating startups at volume.

AngelMD’s process ranks companies with a proven rubric, so you can prioritize your time and investments for the best opportunities and leverage the power of the crowd to invest with the most advantageous terms in place.

Syndicate leaders are an integral part of a successful startup funding plan. Syndicate leaders share their network, and expertise, and receive additional financial benefits.

Whoah! Syndicate leaders? What the heck is that?

Think part-time fund manager. Think someone with subject matter expertise but not necessarily investment or fund expertise. Physicians, members of angel investment groups…professionals…all can participate. No longer does fund management need to be limited to full time venture capitalists. You can get in the game and build a managed portfolio.

Why Would I Do This?

Lots of angel investors help startups raise capital in addition to their own investment. It’s a way to support the company while ensuring their own money is “de-risked.” The problem is that most people don’t have a system for doing this and they certainly don’t get compensated. Through AngelMD they have both. Syndicate leaders are investors in a company who help expose the investment opportunity to their own networks and advise the company going forward. In exchange for this advisory work, they receive “carried interest”* in the investment. This function helps the company progress, gives new circles of people visibility to the investment opportunity and compensates the syndicate leaders for their work.

What’s Involved in Syndicate Leadership?

Almost everyone serving as a syndicate leader on AngelMD is a busy professional. As a result, the process is designed to take less than 10 hours pre-investment and a few hours a year of advisory work. The first step is to serve as a liaison between the startup and AngelMD to help get evaluations of the company conducted (due diligence) and marketing materials ready for distribution. This includes participating in a 1 hour webinar in which the management team of the startup presents their story. So far we are a few hours of total effort into the process.

Next, the syndicate leaders send out information on their participation to friends and colleagues inviting them to get to know the company. Beyond the email communications, the conversations are directed to the startup. Some startups may elect to host a live event for investors….depending on the location of the syndicate leaders, they may elect to join in a meeting of this type.

Once the investment closes, syndicate leaders will join the startup on an advisory call twice a year. The startups provides updates and shares any challenges they have in which the advisors may be able to help.

The response from syndicate leaders has been that the process is interesting and gets them more involved in activist investing. Most choose to get involved in more syndicates after their initial experience, though there is no obligation.

AngelMD conducts a webinar exclusively for prospective syndicate leaders each month. To learn more about this opportunity, sign up for the next session HERE.

*”Carried Interest” is a stake in the upside of an investment. It looks a little like equity in the sense that it only converts to value if there is a profitable exit for the startup. Typically a venture firm works with an 80-20 carried interest split with investors in their fund. Once principal is returned to investors, the VC receives 20% of the “profit” while investors receive the balance. Syndicate leaders on AngelMD do very little work relative to a VC, but the mechanics of carried interest are the same.


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Image Credit: AngelMD