A syndicate allows investors or sponsors to leverage their capital or involvement to raise additional capital for a company they for which they are the syndicate sponsor. Investors who join a syndicate agree to pay a carried interest on the deal.
Janet is a Venture Capitalist who has identified an investment opportunity and wants to commit $2 million on a $6 million dollar financing of a company. Janet performs the due diligence on the company and wants to leverage her hard work and capital and decides to lead a syndicate on AgFunder to raise an additional $4 million with the syndicate to fill out the round. Investors involved in the syndicate agree to pay 20% carried interest on the deal, with 50% of the carry going to Janet and 50% going to AgFunder.
Janet runs the syndicate campaign and raises $4m from AgFunder’s investment community. Janet commits $2 million to the syndicate, and her investment backers fill the remaining $4 million allocation.
The VC firm manages the investment on behalf of the investors in the syndicate.
Jim and his team run a well-known accelerator that identifies exciting emerging ag tech companies. The accelerator wants to raise $1m for one of their portfolio companies. The accelerator has done its due diligence and they know the team and technology well. They decide to lead a syndicate to raise the $1m from AgFunder’s investment community. Investors involved in the syndicate agree to pay 20% carried interest on the deal, with 50% of the carry going to Janet and 50% going to AgFunder.
The accelerator manages the investment on behalf of the investors in the syndicate.
Jordan and his team run a boutique broker-dealer that is seeking to raise $20 million for a cattle ranch in Brazil. The broker-dealer has done its due diligence and they decide to raise $20m on AgFunder’s platform. Investors involved in the syndicate agree to pay 10% carried interest on the deal to AgFunder, while the broker-dealer receives a placement fee from the company.
AgFunder manages the investment on behalf of the investors in the syndicate.
A Family Office has identified an attractive agriculture company that is seeking $10m of investment capital, but the Family Office doesn’t have the expertise to diligence the opportunity, they don’t want the overhead of managing that investment, and they have concentration limits which limit their investment to $2m.
AgFunder’s team performs the due diligence, and manages the investment. The Family Office receives 1/5th of the 20% carry on capital raised on AgFunder.
Leverage your capital
Re-monetize sourcing and due diligence efforts
Promote yourself to companies to attract more dealflow
Promote yourselves to investors who may want to invest in you directly
Help ensure that your portfolio company is sufficiently capitalized
Command better deal terms and/or investor rights with a larger allocation
Backers benefit from the lead’s dealflow, the ability to identify attractive investments, and the ability to perform due diligence on an opportunity.
Backers can invest in a syndicate for as low as $10,000.
Backers do not pay a management fee.
Companies get access to more capital without having to deal with many investors. Companies also get exposure for listing on AgFunder and may attract valuable stakeholders who may become your customers
Backers pay up to 20% of the carry, with that being split between AgFunder and the Syndicate lead.
The syndicate vehicle will charge a small fee to set up the vehicle, pay for accounting, legal, and share custody.
There is no management fees or cash fees paid to the syndicate leader or AgFunder.
- Provide investment rational and structure the marketing materials for delivery on the platform
- Disclose any conflicts of interest
- Confirm that you have performed due diligence on the opportunity and sign a due diligence checklist.
Additionally
If you are an Angel Investor or Venture Capital Firm: You invest at least 10% of the total allocation for each syndicate
If you are an approves Accelerator/Conference provider of Broker-Dealer: You perform due diligence on the opportunity
Experienced and trusted investors will be less likely to back out of their reservations or cause problems.
AgFunder will proxy investor communication, and will need updates and Q&A from time to time.
Inexperienced investors may have unrealistic expectations and may blame you if deals go sour.
Please email us. We will look at your proposed deal evaluate your suitability to lead a syndicate on AgFunder.
Syndicated funds are held in escrow by a third party broker dealer. When a deal hits its allocation, the syndicate leader will sign the investment documents with the company and the third party broker dealer will wire the money to the company. If the deal does not reach its allocation, all funds are wired back to the backers account.
Companies sign an exclusive deal with the
No. The overhead is equivalent to adding one investor to your Captable. The syndicate leader will manage investor communications along with AgFunder and you will only deal with the syndicate leader.
Yes. Although the fund adds one investor to your Captable, it is likely that this vehicle will be considered a pass-through entity for the purposes of counting shareholders.
The recently passed JOBS Act has increased the shareholder limit from 499 to 1,999 and each fund can accept no more than 95 investors.
Yes. The SEC has issued a no-action relief letter for this practice.