A syndicate pools capital from multiple investors to make a single investment in a startup. A lead investor (the syndicate lead) sources deals, negotiates terms, and manages the relationship with the company. As a backer, you invest alongside the lead without doing the deal sourcing yourself.
For foreign investors, syndicates solve several problems: access to deal flow, smaller minimum investments, and leverage from investing with experienced angels who have insider knowledge and board seats.
Most syndicates use a Special Purpose Vehicle (SPV) - a Delaware LLC created specifically to hold one investment. You become a member of the SPV, and the SPV invests in the startup. This means you don't hold shares directly; you hold LLC interests that give you economic exposure to the underlying startup.
The original syndicate platform, with the largest network of active angel investors and the most deal flow.
Equity crowdfunding platform that allows both accredited and non-accredited investors to back startups.
Work directly with a deal lead to set up a bespoke SPV for a specific investment opportunity.
Most syndicate platforms accept foreign investors, but with additional compliance requirements:
| Platform | Foreign Investors | Accredited Required | Country Restrictions |
|---|---|---|---|
| AngelList | Yes | Yes (typically) | OFAC sanctioned countries excluded |
| Republic (Reg CF) | Yes | No | OFAC + some additional restrictions |
| Republic (Reg D) | Yes | Yes | OFAC sanctioned countries excluded |
| Custom SPVs | Yes | Deal dependent | Depends on deal terms |
If you're from or have financial connections to countries under US sanctions (Russia, Iran, North Korea, etc.), you will face significant restrictions. Even if you're a resident of a non-sanctioned country, transfers originating from sanctioned jurisdictions can trigger compliance holds.
Syndicate investments typically involve two types of fees:
Let's say you invest $10,000 in an SPV at a $10M valuation. The company exits at $100M (10x).
You only pay carry if the investment makes money. If the startup fails, you lose your capital but don't owe the syndicate lead anything additional.
You evaluate each deal individually and decide whether to invest. This gives you maximum control but requires constant attention and decision-making.
You commit a quarterly amount (e.g., $6,250/quarter = $25,000/year) that automatically invests across the lead's deals. Benefits include:
If you're new to angel investing, I recommend starting with 2-3 deal-by-deal investments to understand the process. Once you've found leads whose judgment you trust, consider moving to a rolling fund for more consistent exposure.
Investing through an SPV (Delaware LLC) has specific tax implications:
SPV investments create US tax nexus that many foreign investors don't anticipate. Before investing significant amounts, consult with a CPA experienced in cross-border taxation to understand your filing obligations and potential withholding.
Before backing a syndicate, evaluate both the lead and the specific deal:
I'll help you evaluate syndicate opportunities, understand the tax implications, and ensure proper documentation for your investment.
Sergei Tokmakov, Attorney — California Bar #279869