There are different approaches to syndication:
Syndication on a deal-by-deal basis.
On an ad hoc basis, you could form a syndicate around an opportunity. This often happens when you are part of an angel network. There are many of these operating around the UK,which often run on a not for profit basis some with a geographical focus and will provide you with an opportunity to see an ongoing supply of selected investment propositions where you can meet other business angels with whom you could co-invest. Generally networks enable groups of angels to come together on a deal by deal basis according to their interest in a particular opportunity. This allows you to pool resources and also your time and effort in doing the due diligence and to pool your skills and contacts to support the ongoing growth of the business.
CLICK HERE for more information on Business Angel Networks.
Normally, you would identify a Lead angel who acts as the interface with the entrepreneur/management team in co-ordinating the due diligence and agreeing the final negotiations and would then generally act for the syndicate in following the deal. However you will sign the term sheet and other legal documents and subscribe to the shares as an individual investor, responsible for your own investment decision.
Creating a Formal Syndicate:
If you are investing regularly with fellow investors and are looking at investing together in different deals you should consider setting up a more formal syndicate structure,ie a constituted group of investors usually represented by a gatekeeper. Syndicates typically invest on a fairly structured basis using standard investment documentation. There are rules under the Financial Promotions Order relating to structuring and making investments as syndicates and it is advisable to gain legal advice if you want to put a formal syndicate together. CLICK HERE to download a factsheet on Syndication.
Investors who invest together regularly as a syndicate will also be eligible to apply to the new Angel Co-Fund to leverage additional investment alongside their deal: CLICK HERE for information on the Angel CoFund.
