Startup Syndicate Investment Playbook: Raising cross-border capital through an SPV and investing in early-stage U.S. startups

By Gabriel Jung, Jed Ng and Yuki Shirato

“A big applause to the authors for turning their comprehensive knowledge and practical experience in syndicate investing into such a well-organized, easy-to-read content. Syndicate investing in startups has been always complicated topic to me, but having finished the book, I feel pretty confident that I can lead a syndicate investment on my own. Well done!” 

- Hon Lung Chu, Harvard Business School MBA -

• Language: English
• Publisher: Publishdrive
• Release date: Aug 24, 2018
• ISBN: 9780463742976

Book preview

Startup

Syndicate Investment

Playbook

Raising cross-border capital through an SPV

and investing in early-stage U.S. startups

Gabriel Jung | Jed Ng | Yuki Shirato

If syndicate investing seems daunting, this book's clear approach will turn you from beginner to being ready to lead your own syndicate!

- Arno Alarcón, MIT MBA -

A big applause to the authors for turning their comprehensive knowledge and practical experience in syndicate investing into such a well-organized, easy-to-read content. Syndicate investing in startups has been always complicated topic to me, but having finished the book, I feel pretty confident that I can lead a syndicate investment on my own. Well done!

- Hon Lung Chu, Harvard Business School MBA -

A step-by-step guide to starting up an investment syndicate from deal sourcing, pitching potential backers to opening up bank accounts. If you are planning to set up and lead an investment syndicate, this playbook will guide you through the entire process and make sure you tick all the necessary boxes!

- Deuk Jung Kang, INSEAD MBA -

Practical and helpful! This book guides you through syndicate investing step by step and answers all the questions that you might come across during the process. The authors did a great job in telling us that we, as individuals, can support the growth of startups through syndicate investing even when we're not VCs.

- Gia J. Yim, Berkeley Haas MBA -

This is a must-read playbook for anyone who wants to form a syndicate for investing in startups. It provides a step-by-step guide and practical advices from deal sourcing to closing. Very easy to follow and understand with the help from useful templates provided.

- Danny G. Moon, Wharton MBA -

I am glad that I found this playbook! You don’t need to be an investment professional to lead a syndicate investment in an early-stage startup. Just follow what it says in this playbook. You will have become an investment professional.

- Doo Hyun Lee, London Business School MBA -

Copyright © 2018 by Gabriel Jung, Jed Ng, and Yuki Shirato

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the author, except for the inclusion of brief quotations in a review.

If you would like permission to use material from the book (other than for review purposes), please contact [e-mail].

Thank you for your support of the author’s rights.

First edition: August 2018

The authors have made every effort to ensure the accuracy of the information within this book was correct at time of publication. The authors do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from accident, negligence, or any other cause.

Table of Content

1. What is an Investment Syndicate?

2. How an Investment Syndicate Can Benefit all Parties

3. Syndicate Investment Process Summary

4. Deal Sourcing

5. Getting an Allocation for Your Syndicate

6. Term Negotiation with a Startup

Target Amount

Timeline

Investment Vehicle (Convertible Note/SAFE/Equity) & Terms

7. Due Diligence (DD)

Human resource DD

Commercial DD

Financial DD

Legal DD

8. Target Valuation

9. Terms to be Communicated to Syndicate Backers

Lead investor Commitment

Minimum Check Size

Upfront Cost

Carried Interest

Management Fee

10. Contacting Potential Syndicate Backers

Preferred People

Number of Backers

Citizenship

11. Pitching a Startup

1-Page Investment Teaser

Due Diligence Report

1:1 Session

Webinar

12. Soft Capital Call

13. Setting Up an Investment Entity - Special Purpose Vehicle (SPV)

Delaware

LLC vs General Corporation

Manager Managed (Recommended) LLC vs Member Managed LLC

One-Time or Continuous Investment

Entity Formation

Syndicate Formation

14. Opening a Business Checking Account

LLC WITH a U.S. Citizen Member

LLC WITHOUT a U.S. Citizen Member

15. Preparing Tax-Related Documents for Syndicate Backers

Certificate of Passport Copy

Tax ID Application for Each Foreign Investor (W-7, SS-4)

Tax Exemption Documents for Foreign Investors (W-8BEN, W-8BEN-E)

16. Contract with Syndicate Backers

17. Capital Collection

18. Investing as a Syndicate

19. Follow-Up

Monthly or Quarterly Update

Tax Return Prep

Share Transfer

Exit

20. Templates / Application Forms

21. Contract Draft (Lawyer-Prepared LLC Agreement)

22. Syndicate Leads & Backers Network

23. Advisory

24. About the Authors

1. What Is an Investment Syndicate?

An investment syndicate is a privately-run, single-deal venture investment fund that allows individual investors (each a backer, and collectively the backers or the syndicate backers) to co-invest with an experienced lead investor (lead or syndicate lead) in a high-potential startup. This structure allows each backer to contribute a relatively small amount of capital—which may be below the minimum amount required for