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October 1, 2013

I’ve been thinking a lot about what Angelist means for the entrepreneurial ecosystem, especially here in Boston where I live. I continue to think that seed/angel investing is a pretty local endeavor, and even more so when one is hoping to lead rounds or be instrumental to catalyzing a financing or boosting the long-term prospects of a company.

Which is why I’m pretty psyched about Angelist syndicates, especially in relation to the Boston startup community.  Boston is an incredibly rich ecosystem in almost all regards.  There is an endless river of talent (especially technical), the most VC dollars per capital of any major market, and many pillar companies in a lot of sectors that matter.  But what I’ve always thought was lacking was a larger # of high-quality angels of meaningful scale.

Specifically, I’m thinking of angels who are both “native” to many of the sectors that are most exciting today AND are able to invest in a reasonably large number of companies and at large enough dollar amounts to catalyze rounds.  There is no specific threshold here, but for argument’s sake, lets say ~10 investments per year, and $50K-$100K+ per investment.  It’s a pretty high bar for most people to be putting $500K – $1M to work in early stage startups each year.  But it’s pretty critical to a thriving eco-system, and it’s something that exists in pretty good numbers Silicon Valley.

What does exist in Boston in increasing numbers of really strong entrepreneurs who are just getting started in angel investing.  These are individuals who have really deep domain knowledge in a few areas, can add a ton of value to entrepreneurs, and are independent thinkers and willing to put their own capital against very raw startups.  Guys like Nick Ducoff, Roy Rodenstein, Jen Lum, Bob Mason, Brian Shin and dozens of others.

But most of these folks write relatively modest checks (eg: <$50K) so it’s time consuming to assemble a $500K+ round from building blocks of that size.

Enter Angelist Syndicates. Through this platform, these angels are able to amplify the weight of their investment activity in a way that is reasonably efficient for all parties involved.  And if they so choose, they can also earn a carry for their efforts, which only seems fair given the work that their followers would benefit from.

If I were less actively engaged in the local startup market and had an interest in participating in the emerging tech ecosystem, I would be seeking out these individuals and joining their syndicates. It’s still too early to really know how this will all shake out, but I can definitely see a favorite future where high-quality angels and their syndicates create a more fruitful entrepreneurial ecosystem in the Boston market.  And this will probably be true for quite a few other ecosystems as well.

  • http://rob.by/ Robby Grossman

    Great point about the ease of raising bigger rounds for local companies.

    From an entrepreneur’s perspective, do you see any dangers in an elevated herd mentality or increased reliance on “social proof” among investors?

    • robchogo

      I think social proof is not a bad thing in these rounds, especially as the participants become less “sophisticated” and benefit more from a founder and opportunity being qualified by someone more n the know.

      I also think that what this allows is to give more investors the ability to create social proof, which also isn’t a bad thing for the right investors. If Art Papas (random example) invested personally into a HR Software company, I think that’s pretty darn powerful, even if he only writes a $15K check. Pile into that syndicate, baby.

  • @cmirabile

    Interesting perspective, Rob. I don’t disagree, but I think Fred Wilson’s point about leading vs following is still a really important consideration.

    • robchogo

      Agree. But I think in this market, we could still use more of BOTH followers and leaders who can add value

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