How can a syndicate help fill my funding round?

syndicates what are they how do they work and why do they exist and should you invest or raise Capital through them that's what we talk about today with Alex pattis General partner of Riverside Ventures who's deployed over $60 million into 300 Syndicate deals and the co-author of last money in the deao number one newsletter for everything spvs and syndicates so whether you're an angel investor seeking access to deal flow or a Founder trying to close out their next round Alex shares his expert opinion on how these special purpose vehicles and syndicates work and why and when you should use them this is episode 48 of fundraising deep mystified the show where I interview Founders and investors that are actively raising or deploying capital in today's markets and I'm your host Jason kiry I've personally built and sold multiple companies as a Founder operator and investor across multiple Industries and different business models and I designed this show to help uncover what's actually happening in the private Capital markets and help Founders and investors best navigate their Capital strategy the show is brought to you by my company thunder. BC a tech enabled Investment Bank for Founders by Founders where we help companies get funded or acquired whether it's debt Equity or the pursuit of an acquisition RT team can identify what's the best strategy and get the deal done for you to learn more be sure to join our Weekly Newsletter at join. thunder. BC again join. thunder. BC now on to the show welcome back to the show everyone today we have Alex pattis with us General partner of Riverside Ventures and the author behind last money in the world's number one Syndicate uh VC Syndicate newsletter welcome to the show Alex hey Jason awesome to be here definitely excited to to chat and share more uh details here yeah I know I'm excited to have you on the show you and I have had a relationship for you know several months now and I've really enjoyed listening to your or reading your content and learning from your Syndicate knowledge of I think what you've done over 300 plus deals I would love for you to kind of tell the audience a little bit about your story and how you went from a sales director to launching a Syndicate that has done you know hundreds of of deals yeah so um my story really starts with being an early stage operator within uh startup so I moved to New York I had joined um a healthcare Tech startup I was the first um sales hire employee number 11 had a three-year run there some great learnings um ended up joining another company called Market access transformation um joined that company as the first employee pre-launch um really good business bootstrap for about five years did a private Equity transaction and then ended up uh selling um north of 200 million uh so great outcome there and across that like eight-year time span I got great startup experience um however you know while I was um at the second company Market access transformation you know I kind of felt like my my net worth was really all tied into one single outcome right and living in New York was starting to meet Founders and see people kind of building interesting businesses um and a lot of it was just curiosity and a little bit of looking to to diversify um uh uh net worth and I got into Angel Investing um so started doing that for about a year really small personal checks just getting my feet wet um and through that Year and that experience I just love spending time with Founders learning about what they're building figuring out if I could be helpful from like a goto market sales strategy intros to investors intros to customers whatever it could be um and really wanted to to do a lot more of this but also had you know limited personal Capital to do so so um from there I actually joined Jason cis's uh Syndicate which was my intro to syndicates where I was an LP um and essentially was able to review different deals that Jason was syndicating which will get into to more details there um but it was a nice way to ramp up deal flow see deals on a deal by deal basis and commit when I wanted to and um very small minimums I think it's like a thousand doll minimum or maybe 2,000 uh into these deals and I guess after a certain amount of time of being an LP in The Syndicate I just was like Hey this would be great to run if if I'm running The Syndicate um so started that journey and yeah there was kind of like a you know one to two year ramp up of just navigating right like growing in LP base so you've got enough folks that you can actually put together uh a Syndicate um of course getting into the right deals being able to access um some of the highest quality Founders at early stages typically preed and Seed um and just navigating everything from setting up a special purpose vehicle and operating a Syndicate there and I think yeah while it was definitely a ramp up it didn't happen overnight I don't know the story of I launched this first deal and it went amazing and all these people invested um I did at least stick with it and yeah luckily over the past now three four years um we've been in a healthy position yeah as a GP at Riverside Ventures we've now done 300 plus um spvs deployed loyed 70 75 million in total Capital so I've been able to to back a lot of a lot of awesome Founders and uh have thousands of of LPS that have now participated in deals with me that's some phenomenal stats and to kind of help it sink in with our audience a little bit more and kind of understand what you've accomplished because this is you know definitely the anomaly like this is very hard to do what you've done but I think we need to kind of educate our audience a little bit on on some key terms here in terms of explaining what is a Syndicate how does it differ from a venture fund and kind of Define what a what an LP is and spb and things of that sort just give it maybe a little bit of an education to our audience yeah so let me so I guess to break this down like I've used syndicates as a backwards approach to a traditional fund right in a traditional fund you go out you raise your fund however many millions you raise and then over uh a couple year time frame you're typically going to deploy that Capital into your 20 30 40 companies with a Syndicate it's backwards in the sense that I um identify a specific deal that we're looking to invest in and then once I get an allocation in that particular deal I will then go to my LPS who have the opportunity to review the deals that I do on a deal by deal basis and commit so the LPS of a Syndicate right they're not paying um you know they're not investing like a traditional fund they get the opportunity kind of window shop right but see these deals um and decide where they're going to allocate or not from there so it's you know it's a different um relationship and it's a different LP base right so for a Syndicate like when I say LP I'm pretty much talking about um all our accredited investors but it spans in so many different directions of of LPS right some could be Engineers or SAS salese or part of a you know Ops product role at a grow stage startup or you know a Google a meta um you know big companies as well we've got a lot of folks that are founders or CEOs both you know high growth startups big companies um bootstrap small businesses across the globe we've got small family offices folks that um have made money in real estate so it really varies right rlps are are kind of all over the the map in terms of their role um but the beauty for them is the deal by deal looks however it's going to be super important for them to Think Through uh just building out a portfolio right because when you invest as an LP in a traditional fund the fund is diversifying right um diversifying your Capital as an LP in the fund into a portfolio of companies in a Syndicate you get to call the shots but I think we see a lot of people that maybe do you know two deals or five deals over a couple years and that's just not going to be a a large enough portfolio to really optimize for those 100x type winners but um but you get the benefit of the kind of deal by deal looks there so uh let me stop there see if that's kind of a helpful kind of overview of how a Syndicate Works no it is and I think for for Founders that or LPS that are looking at this it's it's an inside look at actually getting through view the deal flows it's more of like you get as an LP investor into syndicates you kind of get to choose and Cherry pck what's of interest to you to write your checks as opposed to picking the manager uh you know just the manager to then make all the decisions on your behalf right maybe just one thing I I didn't mention is um the way a special purpose vehicle works is you know it is a legal entity that's set up for the sole purpose of investing in one company and going on the cap table so you know if we do K investment and you invest um 10k of that 100K SPV you're going to technically own about 10% of that um legal entity that that's set up so I just wanted to to highlight that structure as well yeah there's also a typical uh fee structure in in setting up an SPV can you kind of break out how the fees work for uh the investor and also how it impacts the uh the founders yeah so um for the investors of a Syndicate I'd say that the standard or like the norm for syndicates is to do 20% carry there's a little like there it can deviate a little bit if if certain people do 10 or 15% carry or at a certain hurdle they're doing 25 30% but I would say the standard is 20% carry um most of the syndicates like your typical Syndicate that operates on angelist is not doing any management fees however um there are plenty of folks that do do management fees and it could be a Syndicate it could be a traditional fund that's running a a special purpose vehicle kind of outside of their fund uh sometimes you'll see um 2% fees across 10 years sometimes you'll see one time 2% fee um and then you're always or almost always going to have SPV setup costs so those you know can range from three and a half K to maybe uh 10 15K on the very high end uh that is a a kind of onetime fee for the SPV to be set up and that gets prated across the LPS who participate in a given Syndicate there and correct me if I'm I'm wrong at any of these points but effectively the SPV is just a it's an LLC that gets set up and it's a on line entry on your cap table as a Founder uh so maybe there's 50 people in an SPV you know 10 20 30 50 however you know could be a bunch of $1,000 checks but that doesn't matter to you as a Founder because it all comes onto your cap table is just one entity with you know one kind of person making the voting decision or one person to kind of get the votes from as opposed to having to go and Chase a bunch of small check writers so it creates a much more simplified cap table and spvs can be used for a lot of other purposes um which we you know don't have to go into on this this call but uh from kind of your model it's syndic syndicating out to your existing LP Network that has a particular appetite for the deals that you bring to the table and and kind of circulating all that but if you can kind of walk us through how do you how do you engage with the founder when it comes to running the SPV getting allocation and kind of communicating whether you over subscribe or unders subscribe to whatever amount you commit to yeah good question it's it's it's definitely an art there because the reality is right I'm working to um meet the best Founders stay in touch with them get allocations once there's at least in place and terms have been set right we're really never leading the round and setting terms so you have to kind of um secure your allocation at the right time and the reality is I never know exactly where it's going to land right like I have a I can guess based on the Dynamics of the round the co-investors the founder background the growth the interest uh and relatability to my LPS I can take a guess but the reality is I never really know so I think what's super important is when you're securing this allocation with the founder it's just important to highlight um we are a Syndicate we set up a special purpose vehicle and this is how it works right and the way it works is you know I would say hey Jason like I'm interested to participate in your seed round your series a uh I would love to get 200k allocation because I think that's where it's going to land it could be a little bit less it could be a little bit more what I can do is get moving on my end and kind of keep you afloat in real time as to um kind of where the allocation is going to land and what I would do on my end is pretty much just set up the deal memo kind of a uh an overview of why we're excited about the opportunity the founder um and typically we' share a deck uh sometimes Founders want to kind of review materials make sure they sign off on it sometimes they don't really care so work with them in that regard um and then we share this uh with our LPS to pretty much get them to express their interest and and if they are interested commit to the deal and it's typically I mean it's I'd say it's like a 10-day process we can do it a lot quicker right we've had allocations fill in one two days um there's some that are a grind and it takes longer but I'd say 10 days is kind of the typical turnaround and what I'll do with the founders is kind of just check in with them right maybe a couple days after we've launched highlight that um hey we've got 100K of the 200k committed uh feel really good that you know in the next couple days we'll be able to land at that 200 200 um or hey it turns out there's not as much interest as I thought uh you know it looks like we're going to land closer to 100K and not the 200k um ideally I would have like set them up to understand that so I don't like you know leave them hanging and they need to find 100K elsewhere um and then there's the other side where it's hey this filled up super quickly a lot of demand for the the round is it possible to get 300 400k allocation and if we can that's great right we don't want to leave our LPS money money on the table we don't want to have to scale back LPS um but I think we also we know our place we have to be flexible with the founder and um yeah kind of work with them to to identify what what allocation makes sense or does not make sense for their given round and why do you think Founders work with syndicates instead of you know funds to fill their whole round like what what's kind of the advantage that Founders should be aware of of working with the it yeah a couple things I mean first I do think the manager is one of the most important things right so like me as a manager of Riverside Ventures I think those Founders have to be excited to have me on their cap table uh whether that's operational experience um making intros um or really not doing that much but when they've got a request you know once a quarter uh on a uh investor update jumping in and being helpful there so I think that's a a large part of getting allocations and knowing everybody else kind of funnels through me so while to your point there might be 20 50 100 LPS in an SPV they really only interact with me um but I also think well think and and know right we've got a bunch of LPS that have all sorts of great operational experience starting companies founding companies leading teams um and a bunch of different uh uh connections that can be valuable when it comes to looking for customers and getting an intro or um looking for talent and trying to find a you know director of engineering or AE of sales so I think a lot of syndicates is the manager who's the person kind of the founder is working with but also being able to leverage um the LPS in The Syndicate and the value and the connections that they can bring to the table as well without you know having that same seat at the TA at the table as a a board member and maybe this institution leads who uh you know I don't want to say they take up a bunch of your time they do but that's part of the role and what they get hired for right hired or raise capital for whereas I think we're a lot more kind of laidback when it comes to you know requests and updates of course we want to be kept in the loop but um we play our role and I think our role is different from a a lead and a board member yeah and I think you you describe it well and I think a lot of syndicates are in kind of your world uh of you know there's some value ad and it's now kind of getting access to a larger LP base once that deal gets distributed and kind of maybe those LPS want to add value in some way maybe they only write a th000 $2,000 check but they know the people you need to get connected to there's these additional value that can come with kind of casting a bigger net but not paying the price as a Founder having you know the 50 names on your cap table so it's a great way to kind of get access to to a broader base of investors I guess from my experience working with syndicates and and just knowing how the ecosystem Works what would you say are some of the pitfalls or the kind of misunderstandings that Founders have towards working with a Syndicate what where kind of expectations don't align yeah I mean I think first and foremost it's just understanding how they operate like I kind of talked about this and right like I I can I can um Express a ton of enthusiasm and investing in your company and excitement but the capital is not ready to go right so I have to go back and I have to find the capital and sometimes it works amazingly well and sometimes we fall on our face and and so I think just um that's an important thing for Founders to understand right while they could commit to the round uh that's one thing having the capital ready to go is another thing um also I'm generalizing a bit here but again syndicates are not leading the round or setting terms right so you know if you're going out for a seed round I think and right and you you want to pitch me and I'm excited about it that's great I'm not going to be the first VC who jumps in and and prices it and kind of gets everything to fall into place that's not me I can certainly be helpful in making those introductions but there's very little I'm I'm going to do and I can do in terms of committing and investing um until that lead is in place so to that point I think syndicates they fit better generally speaking once you've got a lead you've got um the terms that are set and you're look to fill in capital with value ad folks folks who can move quickly folks that you've known and have been around for a while and and want to get on the cap table um but like if you're if you're reaching out to me because you know I invest in you know um B2B SAS companies at seed I'm not going to be the right fit uh if you don't have a lead in place yet so it's a as uh my partner and I say we do a lot of kind of hanging around the hoop but uh I don't shy away from from kind of that role yeah that's kind of why I asked the question was is to educate Founders in the fact that you know if they don't understand how syndicates work they couldn't come to you they could be super excited about like oh we talked to R side Avengers they're amazing they love us but they have you have a certain process as many do where you're not going to write a check until certain check boxes are or you're not going to Syndicate until yeah certain boxes are checked exactly and and I guess like uh to explain that because I think it's important to Founders is right like the the relationship of a Syndicate is different than a fund right the capital is not already there so we need to find the capital and in order to find the capital there are certain things that our LPS look for when we Syndicate deals um you know Founders their background that's always going to be important right like why are we betting on the the right horse for whatever the business could be um you know I would say it's quite similar to other VCS and how they think about Market sizing um um traction but another thing that's a little bit superficial but it's very real to syndicates is who's leading the round who are the co-investors right A lot of people in my Syndicate I think they enjoy being part of my Syndicate they you know I think I I pick good deals but uh they're going to be more excited to see tier one VC that's leading the round than Alex is excited because XYZ so it is a bit superficial but I think that's super important and you know it's like if I talk to a Founder um who's raising a seed round and we want to commit you know having a a tier one VC and getting that um buy in from rlp base is going to be 2x 3x 4X versus the same deal the same founder the same company but without that that tier one VC so I think um I don't know people shy away from talking about it I don't feel the need to but I think that's going to be a key driver for a Founder in working with The Syndicate and understanding the lp buying well Alex this show is all about demystifying the fundraising experience and that's what we're doing here in terms of De demystifying actually how get to really work and that's why I wanted you on the show is because I feel there's a lot of misunderstanding or mis expectations from founders of what to actually expect and I wanted to talk about this point because when it comes to small check riter LPS they're having to rely one they use syndicates to get access because they wouldn't be able to get access to Deals otherwise like they're not running big enough checks so the lp incentive is really you know join a couple syndicates no commitment required to join outside of you know maybe you eventually want to write a check so it's optionality to kind of see what's coming across the table but then it's also when you actually U write that check they're not doing they don't have access to the founder they have no diligence abilities they can't do diligence on the deal they're not getting the data room and so unfortunately it is a vanity game in terms of like oh a16z is investing oh well it must be great you know but we can about their track reg things but they uh you know having a tier one BC just makes people feel like oh well someone else did the diligence someone else had the access and approved so I feel more comfortable jumping in on this than otherwise of either no name BC or or no other Co you know co-investors because that's that's the riskiest of it all is when you invest alone and a lot of investors that's just a hard pass in a lot of cases no one else is at the table and it sucks for Founders because they want that one person to be the person no one wants to be that person I yeah I think that was a great summary like I'm not gonna say it's impossible for a Syndicate to do a deal without a co-investor I just um that deviates from kind of the the norm and how syndicates uh act and operate so let's gears a little bit you have a great newsletter in terms of educating people on syndicates and just how they work and you know you obviously you've done countless yourself what are you seeing in kind of the market for syndicates you know are you seeing more and more of these pop up are you seeing people do these in lie of actually starting funds kind of give us a your sentiment on the The Syndicate ecosystem yeah um I've got multiple thoughts there I think so so many folks who I think are successful in running a Syndicate they are there to build a portfolio and go on to raise a fund or join a fund so I think it's kind of like this Middle Ground of let me get my feet wet I'm not jumping into like a a 10-year commitment or anything here um in starting and running a Syndicate and let me prove that I've got good deal flow and I can get LPS that are interested to participate in my deals so I think um a lot of folks who start syndicates the goal is to go on to raise a fund um I've enjoyed kind of doubling down tripling down in The Syndicate ecosystem but uh I think a lot of folks do that um I do think sometimes I just I talk about syndicates all the time and everybody's like oh like this sounds awesome like I have good deal flow I have a bunch of people who invest in deals with me and it's just harder than it sounds right like actually having those people to commit Capital have multiple people commit into a deal um get that done and be able to like repeat that um um whatever deal over deal month over month whatever it is it's not easy so it does require a lot of kind of work and I think a lot of people um a lot of people think it's like oh if they have great deal flow then they can run syndicates and there's a lot of work that goes into growing nurturing your LP Bell building trust with them so I think it can be awesome but it's it's you know it's kind of like raising a fund it's it's not that easy right like it takes a it takes a lot of meetings it takes a lot of uh work and storytelling to to raise that Capital to actually hit go there um and then also in terms of like deals in the ecosystem um I do think right now people are um I mean look PE people are a lot more focused on the economics of a business right like not how big this can be but like how much capital is it going to take to get it to to be as big as it's going to be or whatever unicorn you want want it uh to look like um and I also see a lot of individuals that are interested in some of these later stage like growth stage pre-ipo stuff um which I get because it's like a shorter path to liquidity so like the lock up for them um is typically going to be a lot smaller than investing at preed and Seed where we're talking about a decade and maybe longer um so we're seeing a lot more dollars go to these sexier gross stage post- product Market fit deals I o think that is truly unique to the LPS that invest with us where it could be 5K 10K 50k 200k checks right it's just um that access to be able to write a you know those size checks in these um you know 500 million to 10 billion dollar companies that are are still kind of pre-ipo uh I think a lot of folks like that and syndicates are potentially the only way to to invest in many of these companies because you can't go direct um however the top early stage deals are still getting done um you know this isn't 2021 anymore but uh I think people are still certainly deploying Capital they're a lot more cautious about it and um yeah those are kind of some of the the things that are are top of Mind of what I'm seeing in the the ecosystem right now to give people an idea like you you definitely have one of the larger syndicates out there in terms of LP base and when it comes to getting deals done I know you probably only can speak for yourself but if you can maybe speak to the broader Syndicate market like what percentage of LPS actually are doing deals in terms of like a deal by deal out of like the whole LP base that you have versus maybe how many LPs are actually active in a year and had did you know done at least one deal yeah it's a great question so of my Syndicate um about 60% of The Syndicate has done at least one deal now it's I mean it varies a bit because for folks who have become a little bit more inactive and have not done a deal in the past year like I segment who I send my deals to it's not like you're in The Syndicate you're out of The Syndicate and you see everything right within the Syndicate um priority is going to those who are a lot more active um have deployed more Capital over time with me so there's a lot of different ways that I break down who gets sent which deals and right some deals are not sensitive at all some deals are hyper sensitive so we got to work with that um so yeah I guess look you've got folks and I think there's a lot of churn in this space right like you see LPS that come in they back some syndicates and they're like wow I'm seeing a lot more deals that I'm excited about than I thought I was going to so however much they thought they were going to deploy that year they ended up deploying more and that's an unfortunate thing right um I think because of that reason it's like oh they were only around for one two years they didn't think about really building out a portfolio the way they should be over a fiveyear you know plus period so we do have a lot of folks that come in and maybe over allocate too quickly and then um leave but then you know on the other side of the spectrum you've got folks who are quite Savvy investors and um yeah have a a little bit more long-term thinking uh there and then sorry the last thing yeah I've got a large Syndicate so I think the the lp Buy in per deal is is fairly small um but I don't think that's a bad thing right it's if you're an LP you shouldn't be doing every deal that I put out right I think that's your opportunity to double click and figure out which deals are you excited about they resonate with you they're a good fit in terms of the stage that you want to invest in um and figure I mean I think it's just important to figure out per year how much do you want to deploy and how many portfolios are you you uh portfolio companies are you looking to to add per year and kind of back into that yeah and at the end of the day in most cases a lot of LPS are a part of multiple syndicates and they're seeing you know multiple deals in multiple areas and uh it's hard to you know as you say kind of estimate exactly who's doing it but it's interesting for Founders and other people listening to kind of understand how you think about you know distribution of a deal like how there is control for the GP to decide you know who gets what deal maybe not doing a spray and prey a lot of people feel syndicates are just a spray and prey to like a giant list maybe some people bite um but you've been doing this for a while you have some pretty solid experience and you kind of know who to bring what deal to to kind of get the deliver on the promise that you made to the founder uh and trying to get that allocation you know secured so now like from a perspective of a Founder going to Market maybe they got a lead they got some momentum going in their Capital raise what be some of your advice to to a Founder that is you know consider you had a conversation with a Syndicate or is looking to pursue syndicates as a as an option to fillter around yeah so I think the timing you laid out is correct right like that is the ideal time it's it's more um actionable uh um at at that time when youve got a lead and and terms in place and you're looking to round out you know potentially with syndicates um I think it's important to just understand who's the manager of the Syndicate right do you want to work with I mean like you're still you know bringing people under your cap table it's a long-term relationship do you want to work with them I think it's also important to understand how they interact with their Founders right I don't think there's necessarily a right or a wrong way for syndicates um uh to kind of act or interact post investment but I think it's important for the founders to understand right are you going to be more hands-off um and frankly just super easy to work with or you know do you typically get involved uh and help with XYZ and then also who are the LPS in your Syndicate um what types of I mean like what's the typical check size that you're writing um and how do you add value or how do folks in The Syndicate add value if that's something the founder is looking for so again I think there's a lot of different ways it can kind of be carved out in terms of right fit wrong wrong fit and where syndicates add value versus just S easy to work with but important for for the founder to to kind of get the the details from The Syndicate lead and understand more about the lp base yeah that's a common advice I give to a lot of Founders always ask questions a lot of Founders they they pinch their heart out and they're like wow I think we did a great job and then they actually have no idea what that investor can write a check for how it's going to work how long it's going to take and all that kind of stuff um but I think another thing to to tap into is you the reality of these check sizes in most cases it's a 100K uh you know uh syndication and in that case like sometimes there's fees as we talked about like the uh the setup costs those cost 4 eight grand uh that's means the founder usually only ends up with maybe 92k 94k and so that's something also to kind of keep into consideration is like you were told but you're actually only getting like 92 or 94 yeah so I think that's important for that um Syndicate to explain right and if I'm so so if right if I'm looking to invest in your company and I want to write 100K I know I need to raise about 110k so that I can invest 100K right and I I kind of take that like that burden is on me to to under right I'm not I'm not looking to like I can explain to the founder hey thus far we've raised 100K that doesn't mean I can invest 100K that means we've raised 100K I can invest you know 91k or whatever it may be um but when I request an allocation I'm baking in the fees and everything there as well so also important for for Founders to understand and hopefully The Syndicate explains um hey if we've raised X that means it's you know 0 92x of uh investable Capital yeah and I think that also is an indicator of what your relation ship might be with a Syndicate lead if they're not providing this level of education and managing expectations and that could be a potential red flag for for Founders looking to work with syndicates um so what are some common mistakes that you are seeing syndicates make in the market right now when it comes to to getting deals done um I mean I'd say one just like lack of transparency on the process with Founders right uh we've kind of spoke about this but I mean I think it's an absolutely terrible look to to pretend you're not a Syndicate and act like a fund and sayg great we're could commit this and then explain to them later that you don't have the capital um I also think you know it's hard to really know these allocations that you're going to get so being transparent and asking for like ballparks I think is important right ultimately it's the Founder's decision you got to work with them to to figure out what works and where there is or is not flexibility um but a lot of times you'll probably have folks that request more allocation and come back later to invest you know less capital and I think that that probably leaves a bad taste in the the founders mouth maybe they didn't understand that uh fully and it would have been better for them to do that but they didn't ask questions um but also regardless is like if I say I'm going to invest 200k in your company and I end up investing 100k you know that's 100K less or 100K that you got to find elsewhere so um yeah I think those are kind of some of the the reasons these these deals don't get done sometimes I also think there's a lot of Syndicate leads look it's a it's a bit of a grind right every single deal you need to find the capital to get it done so it's not necessarily easy um I think there are definitely some Bad actors where they just go into like hyper Cell mode on like really selling a deal maybe making it seem better than it is or um picking and choosing details to share um which I think will will haunt them in the long run and uh yeah I think for for that reason you know maybe folks have invested in deals that that um potentially felt the the picture was painted a lot more pretty pretty at the time and uh uh over time realize the company isn't really doing as well or um you know so so I guess generally speaking it just doesn't feel like a great look to go into crazy sell mode for for any startup for that matter right you never know with any of these businesses what's what's gonna happen so certainly nothing is a sure thing yeah and it's also seen as a especi I would say more the seasoned investors when a deal is oversold in the sense of like excessive adjectives of like they're the amazing or they you know like these types of things that overell or kind of like try to fluff it up quite a bit one it's illegal for my side of the work uh you know being a registered rep like cannot use those type those frivolous words or you know like they're gonna be the best uh in the world those types of things yeah um but often like seasoned investors know that that's all Bs and that you know someone's trying to Puff their chest and usually is a negative sign that's if I see that in a Syndicate uh distribution or you know from a Founder telling me how amazing they are uh it's s seen as a as a red flag they're having to Puff their chest as supposed to let their let what they've done you know show for itself so really good good advice across the board What's um what's a fun story what's a what's a deal that you've done that you know either blew up or you know maybe like a fun deal that uh kind of came about in an interesting way what's something you'd like to share so 300 plus deals I got a lot of stories packed in there um okay a couple stories good one uh you know invested in a company probably 2020 maybe 2021 um I think we got in at like 40 million valuation company's been growing profitably very little dilution very little institutional Capital we've done a couple spvs um you know you don't hear this often from startups but they're actually in a position where they recently bought back shares um uh from investors so this was a great opportunity where we sold I think it was like 30 35% of our first SPV we returned a 3X um two investors there and we still got 70% of our Capital sitting in the the deal um you know so playing cheerleader role for for the future ahead but nice win great opportunity to return 3x and still keep the majority of our capital in the deal uh also a nice kind of uh liquidity Avenue beyond the typical IPO acquisition um so so that's an exciting one I mean a funny chaotic one right like there was a deal once where I launched launched the deal to LPS within the literally the first hour of the deal uh you know a handful of people committed one of the one of the LPS committed like 10K and immediately went to LinkedIn and updated his profile to investor in the company which I mean i' I've never come across that before obviously the founder was super pissed reached out to me I mean I didn't even know what to say because I'm like this isn't something I typically need to coach people on not to do uh so that's one that that that's one that stinks it's just like maybe I mean most LPS would never do that but I think LPS need to be sensitive to certain materials um also another you kind of spoke to this like there's been a handful of um deals we've invested in where the founder you know maybe I've educated them uh throughout the process on like how the SPV works and a lot of times we'll have Founders that are like oh that's cool like I actually have a bunch of friends family customers that would be interested in investing I don't want to take them direct like can I send them to your SPV um and we love that we're like yeah of course if we can be helpful right and you want these folks on your cap table um you can be very flexible with economics based on what you're looking or not looking to do uh so we're seeing more and more of those that I think it's it's great and it's just a win-win for The Syndicate and for the um founder so yeah those are some that that stick out I've got I want to I want to kind of call out why that LP updating is LinkedIn was was an issue um and not you know one the founder was upset in terms of like you know technically that investor sort of invested but it wasn't their you know deal they didn't originate they didn't have the relationship little little presumptuous to you know basically say you're a part of the team as an investor uh you know little little taboo you if you're not Direct on cap table it's you know for this is advice to to our listeners here you're you're not uh you're not technically at investor you can't declare that you you sourced that deal and you're you're on that cap table so just you know some words of in there I see a lot of I would say um aspiring investors or just you know people that are using it to kind of tout their resume for getting into um you know venture or something of that sort trying to do that stuff but unless you Source the deal man a relationship uh you shouldn't probably be you know putting that on the on the resume Orin so I'm glad we kind of called that out I think it's a lot of people need to hopefully that was a oneandone situation that I never deal with again yeah i' I've done a couple Syndicate deals myself and some are cool I'm like oh man I would love to say that like that would just be so inappropriate to say that I'm like oh I invested in those companies like I I back to Syndicate that's what I yeah yeah yeah you see a lot of that and I tacked along uh so you know credit needs to belong to where it's own um but going back to you mentioned on the the the founder side in terms of bringing in your own investors as a Founder into a Syndicate so allowing your friend you know allow The Syndicate to run your friends and family round which kind of brings me to the SPV so a special purpose vehicle the LLC that get spun up to kind of consolidate a bunch of investors into one line item on a cap table uh it's you know strategic when it comes to Future Capital raises or exits or just having to get sharehold approvals and and that's a great way to either one do what they did with you where hey I don't have to do any work as a Founder I just say hey you're interested in investing go talk to that guy he'll get you all taken care of it it'll be clean and easy uh and you'll you you'll get your piece of whatever I create um in this in this exchange uh or there's also ruvs which are on Angel list or you can run your own SPV with your own lawyer or other platforms like sidecar and stuff where the founder can run an SPV that has no carrier feeu upside fee structure just the cost to set it up and Syndicate that out to your own audience so it's basically like a crowdfunding esque type experience that's not ran through a crowdfunding you know platform it's just but you got to keep it tight you got to keep it to you know accredited investors only so there's limitations and whatnot um but that's something that I see Founders doing uh and educating themselves on as an option so I think that's something we definitely want to uh share with our audience today yeah absolutely well you know Alex I've really enjoyed the conversation that we've had and you know the the knowledge that you've been sharing you know you have a podcast I sorry you have a newsletter and you have you're crushing on LinkedIn in terms of the the content you're putting out there uh what's the best way for for people to to learn more about you or potentially uh reach out to you yeah um as you said active on on LinkedIn at Alex pattis um and then follow my newsletter um last money in WE Post every week do a deep dive uh something in Venture Capital through the lens of a Syndicate lead so uh putting a lot of thought and effort into that on a weekly basis it's a it's definitely a good read for aspiring fund managers or Syndicate leads or people that want to get exposure to how Venture works I definitely feel that the the content that you're putting out Alex is super educational very valuable and real I feel you give really real insights as to what's going on uh that can really help people wrap their head around how this ecosystem works and if they want to add value you know don't put that you're an investor on want a Syndicate deal on that but uh but it's been great having you on the show and you look forward to including all those links in in the show notes for everyone to to dive into and learn more from but uh thanks for sharing all your your insights yeah this was fun appreciate you having me all right great thank you thanks for listening to the show today we hope you learned something valuable and if you did be sure to let us know in the comments or by hitting that like button and if you're a Founder looking to raise 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