Rolling Funds and Syndicates

Hey there!

I know! I know! It’s been a while since we last spoke. Even my mom back in India has the same complaint. I call her way less than I should 🫠 It’s the same struggle - I want to reach out only when I have something exciting to share! 💀 

Being new to newsletter writing, I have to learn that the exciting parts need to be earned by the smaller learning milestones we make along the way!

I urge you, dear reader, to stay with me on this journey as I lay down the building blocks for you to appreaciate the exciting world of angel investing and Indian startup ecosystem.

Today, we will talk about some common structures of investing. 🧱🚧🏗️👷‍♀️🛠️

🧱 Common Fund Structures

  1. Angel Syndicates: Angel syndicates are groups of investors who pool their capital together to invest in startups. Syndicates are typically led by one or more experienced investors who source deals, conduct due diligence, and negotiate terms.

  2. Rolling Funds: These are a type of venture capital fund where fundraising happens continuously on a subscription basis, allowing for a steady influx of capital that can be invested in startups over time. They provide a more flexible way for angel investors to invest in startups.

  3. Venture Capital Funds: These funds pool money from multiple investors to invest in a portfolio of startups. The funds are managed by venture capitalists who have the expertise in sourcing deals, conducting due diligence, and providing strategic guidance to portfolio companies.

  4. Private Equity Funds: Although they typically invest in later-stage companies, some private equity funds invest in pre-IPO companies. These funds buy significant stakes in companies, often with the intention of restructuring the company before selling it or taking it public.

For most small scale investors that make majority of my subscribers right now, Angel Syndicates and Rolling Funds are the most relevant and accessible.

🎊 Benefits of a syndicate/rolling fund

  1. Risk Diversification: By pooling resources, individual investors can participate in more deals and diversify their portfolios, thereby spreading their risk.

  2. Collective Wisdom and Expertise: Syndicate members can leverage the collective knowledge, industry connections, and business acumen of the group, leading to better investment decisions.

  3. Higher Deal Flow: Syndicates often have access to a wider range of potential investments, given the broader network of its members.

  4. Larger Investments: Syndicates/rolling funds can make larger investments than most individual angel investors can afford. This enables them to participate in larger funding rounds and support companies as they scale.

  5. Negotiation Power: With larger total investments, syndicates or rolling funds can have more negotiating power in terms of deal terms and equity stakes.

My favorite finds

I have been sharing the work of other creators with you, and I am so pleased to share this fantastic newsletter called Startup Rabbithole that I am partnering with today. Check it out and subscribe! 

Startup RabbitholeExclusive early-stage startups & trends.

💰So, how can you get your hands dirty?

Well, don’t! While it may be tempting to invest money in a syndicate or a rolling fund with the hope of getting rich, we already know from some of my previous posts that there is no substitute for due diligence. So, use the link below to explore different syndicates and funds. Play around, and let me know if something grabs your attention!

Been a pleasure learning with you! Will see you again next week. Until then,

Stay motivated! Stay strong! Cheers!

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