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| Opening Day Barron Park Elementary School (9/8/98) |
"Make new friends,
but keep the old.
One is silver,
the other is gold.
A circle is round,
it has no end.
That's how long,
I will be your friend."
(girl scout song believed to be adapted from poem written by Joseph Parry (1841-1903) or perhaps Boardwalk Empire if you believe Reddit)
In the picture above, "Make New Friends" was sung by the entire Barron Park Elementary School on its first day as a neighborhood school in 1998. A fitting song for a new school year and new school. (Side note 1: My daughter with back to camera and her friend to her right in pigtails both graduated from UC Santa Barbara together in 2015. Side note 2: School started on September 8th. Yes, after Labor Day! When summer is supposed to end, not in mid-August like Palo Alto and most other school districts do now.)
I've always believed in the golden rule. You know, the one you learned in nursery school about treating others how you would like to be treated. However, in my 25 years in the Silicon Valley startup ecosystem, I've experienced the VC corollary to the golden rule much more often: "He has the gold makes the rules!" I can just picture Mr. Rogers saying "Children, can you say participating preferred stock with an uncapped 3x liquidation preference and a full ratchet?" Well, maybe so after watching his middle finger salute.
When AngelList first launched syndicates a few years ago, I was very skeptical of the idea of angels taking carry on my investment. I've always felt that as an angel we should be sharing our best opportunities with each other and follow the golden rule. I work hard on mine and you work hard on yours and we all win (entrepreneurs, angels, and upstream VC's). I went back to look at a few twitter exchanges I had at the time and clearly had some issues with the program.
So what changed and why I am now launching a syndicate?
- I got over it. In looking at how syndicates have developed, there have been a lot of positives for both angels and entrepreneurs. Some syndicate leads have gotten allocations in competitive deals where angels wouldn't have had the opportunity to invest previously. Some are able to offer better terms (pro-rata rights, lower valuation caps) than an individual could get.
- It's great for entrepreneurs! A syndicate is very effective and efficient way to raise capital. In addition to the syndicate participants who can potentially add value, AngelList has its own institutional funds that often participate. In addition, the entrepreneur has only one investment entity on its cap table rather than a long list of individual angels. This offers many of the benefits of angel groups (larger investment, breadth of experience, single entity) without many of the negatives (long process, lack of transparency, etc.)
- I'm still not totally on board with the 15-20% carry most syndicates are charging (still stuck with that golden rule). This is why I am taking 0% (yes you heard that right, 0%) on my syndicate. There will still be a 5% carry charged that goes to AngelList, but I'm good with that. They have build a great platform and should be compensated for the marketing, administration, etc.
I'm sure your next question is how can I jump aboard? Well, the train just pulled in to the station and isn't leaving just yet. I expect to announce the first two opportunities this month. You can learn more about the Steve Bennet (aka "ProfessorVC") syndicate here.
