Types of Syndication Partners
1% 1%
4% 2%
Government
Angel Capital
16%
Angels, VCs & Strategic Partners
Angels & Government
Angels & VCs
Government & Banks
49%
VC
Other
12%
Source: Schure & Dodaro , 2014 Report on Angel Investing Activity in Canada
15%
Deal syndication allows Angels to raise much larger financing rounds – far larger than a single Angel group could normally do on its own. This is particularly important when the investee company needs more funds than the group has available. It also diversifies risk and can leverage the expertise and networks of others. However, it can often take longer to close a round of financing unless somewhat standardized deal terms are agreed upon in advance by the various partners. NACO and Angel Investors Ontario have affiliated with the US Angel Capital Association to offer a standardized deal process, sample deal syndication agreement and cooperation agreement (the Treaty) as described in Chapter 9 of Age of the Angel . Since syndicated deals are usually much larger than normal Angel rounds, they often include VCs, or they sometimes compete with or avoid VCs entirely. As shown in the figure, in Canada, half of all syndicates involve other Angel groups and 15% include VCs. In the US, over 40% of syndications include VCs. (Angel Resource Institute, Angel Investing Basics for Economic Development Professionals ) 4.6 Signing the Deal – Legal Stuff At the end of the deal negotiation process, there is the official closing. Similar to the closing on a house purchase, this is the final event when the transaction is completed and the parties, usually through their lawyers, exchange properly signed documents and transfer funds. The specific documents could include: Unanimous Shareholder Agreement – This implements the term sheet conditions into its final legally binding format and must be signed by all founders, previous shareholders and new investors. (See NACO Online Sample Documents on the NACO website.)
78 A Practical Guide to Angel Investing
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