The future looks bright for deal makers in startups and other private investments and Sydecar presents an exciting way to get started

According to PitchBook Data’s research conducted with the National Venture Capital Association (NVCA), 2020 was a record year for the venture capital industry and the momentum did not slow down in 2021. And judging by the amount of activity in the last 2 months, 2022 is going to be another blow out year.

While my data is a little bit out of date, it is still very illustrative. Q1 2021 investment, exit, and fundraising activity all exceeded first quarter results from the year prior, with investors deploying about $69 billion into VC-backed companies in the first quarter alone. That’s a 92.6% increase compared to last year.

Even more interesting is the fact that angel/seed and early-stage investment remained high. The median and average early-stage deal size in Q1 was $7.5 million and $20.4 million, respectively — an increase of 15.3% and 28.7% compared to 2020. Clearly, interest in startups and private investing is at an all-time high.?

Individual investors have been making their presence felt, too: According to Bloomberg Intelligence, individual investors comprised 19.5% of U.S. equity trading volume in 2020, which is a 4% jump compared to 2019 and more than double the number shown in 2010.

These growing statistics have been driven by a few factors. For example, people stuck inside during the global pandemic may have used their extra time to create and control their own portfolio, and the proliferation of online brokerage platforms (like Robinhood, Webull) and innovation by incumbents, have made it easier than ever for the average person to open an account and start investing right away.

There’s also been a sharp rise in the interest of public equities thanks to “meme” stocks, online forums, and the fast evolution of the cryo economy. This has gotten buy-in from young investors who have plenty of time on their side to be successful. Gen Z, if they’re not already, will be known as the investor generation because of this fact.

This rise necessitates better investment tools and standardization

More investors joining the fray for the first time is something that should be embraced. It helps to spread the wealth and opportunity around. However, deal makers need tools and solutions in order to make it easier to bring investors to the table. The traditional way of doing things — e.g., hiring a lawyer and accountant to draft documents — is outdated, time-consuming, and expensive. It just isn’t good enough for the day and age we live in, and these walls need to come down.

Enter companies like AngelList and Assure. These platforms have really pushed the boundaries of innovation. By applying automation and distribution through software, AngelList and Assure reduce the cost and operational overhead of setting up and running investments. They provide easy-to-use investment management capabilities for investors, fund managers, and founders alike, and they empower anyone who’s interested in investing to support the startups they’re passionate about.

I want to start off by saying AngelList is great! I got started with many of my early angel investments through AngelList and it works incredibly well. But there’s one service that’s just come to market that I’m particularly impressed with: Sydecar.

From my experience as an investor, I can confidently say that Sydecar is the best way to create, share, and execute private investments. I say that as both a customer and an early angel investor in the company. It’s a really great service that I believe in, that is helping push the boundaries of what is possible in the realm of private investing.

A little background on Sydecar

In 2020, I met David Meister and Nik Talreja. They were entrepreneurial lawyers who were launching multiple projects, but I was intrigued by one idea in particular: to build something that would make it dead simple for deal makers to set up and execute SPVs. In turn, this would dramatically break down barriers to entry for investing.

As ex-lawyers, David and Nik were well-suited to pursue this vision and implement the practical aspects of the venture. They also have an incredible entrepreneurial bent — a mix of ambition, perseverance, big-picture thinking, and grit. And to top it all off, they already had some fascinating ideas about how to marry deal documents and software to aggressively lower the barriers to entry for deal makers looking to get started.?

I knew then and there that this was a winning formula. That’s why I’ve been thrilled to be an early investor in the company. They have been growing a really wonderful team and investing in building a delightful product.

Now, they are starting taking the cover off what they’re building, and it’s time deal makers started paying attention — because I can guarantee they’ll like what they see.?

What’s so great about Sydecar?

If you know anything about my investing style, it’s that I value customer-centric teams. Sydecar is the perfect example of this: When you make a deal, the whole team leans in to help you push things along. Nik, Dave, and the rest of the crew are incredibly thoughtful and expert problem-solvers, so when issues arise, they’re on the scene immediately to help troubleshoot and get things back on track.

Sydecar’s newly launched V1 product is truly end-to-end, including legal doc generation, indication of interest, banking and entity formation, post-closing actions, tax, reporting and more. They’re iterating on the product at a rapid clip, and have a shocking amount of early investors (including myself) active on the service who are putting a lot of “water through the pipes” in order to provide feedback to the team on ways to improve (and they have been listening and executing). They’ve been great listeners and very responsive to feedback, which has made for a smooth, streamlined, and collaborative process.

One other thing that I really appreciate about the team is how they are trying to innovate, not just on technology, but also the business model.? They are experimenting with pricing in order to make things simpler, more economical, and more predictable. For example, unlike other services which can charge up to a quarter of carry per deal, Sydecar does not charge any carry at all.?

Even more exciting than product and business model innovation, they are also pushing the boundaries of standardization. More on that later.

With Sydecar’s approach, deal makers just have to pay a one-time setup fee before they can get going. This fee is variable with SPV size, making it more tenable to syndicate deals as small as $30-50K. They may roll out other pricing for future products and features, but it’s great to see them take a long term view on the base product pricing.

What I see in Sydecar is that it has a strong team with a lot of product market fit. This is why I’m thrilled to be both a customer and investor. I’ve invested in a number of deals through it, so I know firsthand how efficient and effective the product and team are.?

Seeing this strong, customer-centric team that’s aligned with my investing thesis and philosophy is exactly what led me to invest in the company — and why I think it’s so great.

Why Sydecar stands out

Now, at this point, you might be wondering: Aren’t there many solutions out there, like AngelList and Assure, that do similar things?

Yes, there are. But here’s why you might be interested in Sydecar: their vision is that you, as the deal maker, own the relationship with the investors in your vehicle.

When you compare this approach to others, you’ll see that this is a fundamental difference. Now, depending on what your needs are, one may be better than the other. For example, take AngelList. I want to make very clear: AngelList is fantastic and there are many reasons you should use it. They innovated and created the category over 10 years ago, and have been doubling down on some incredible new products recently such as Rolling Funds and Roll Up Vehicles. They offer great advantages if you buy into the AngelList ecosystem. Chief among those is leveraging an existing set of relationships with potential LPs already on the system to market to an established customer base, which is especially useful for those who’ve run into a cold-start problem. But, the trade off is that? you do share economics with AngelLits for those LPs that they bring you, which in my opinion is very fair.

In short, AngelList is like Amazon. Meanwhile, Sydecar wants to be more like Shopify. You more directly own the relationships that you have with your LPs. However, you also have to build your own following of LPs to invest in your deals. In an age where online communities abound, Sydecar makes it easier than ever to mobilize your community to invest together.

As the deal maker, this distinction is important to consider. Both approaches can work beautifully depending on your needs and circumstances. But at the end of the day, it’s up to you to decide what solution is right for your needs.

Finally, Sydecar is also developing and championing standardization across the private investment industry. You’ll soon start to see them start to roll out standards across every aspect of the deal making process, from documentation to money transfer to post closing compliance. They’ll start with SPVs which has been their proven bread and butter, but it will be baked in to all of the many products to be launched in 2022. Standardization will lead to greater predictability, further lowering the barriers to entry in the space.

The future of investing — and Sydecar’s place in it

It has never been easier to be an investor in private companies, and the barriers keep coming down. This is in large part thanks to the proliferation of investment management solutions on the market today, and there are some really great options out there.

I’ve invested through AngelList, Sydecar, and even direct into companies, and I’ve really enjoyed doing so. The benefits of angel investing are many, from learning and networking with the best of the best to just having plain, old fun. With the barriers to entry lower than ever, I highly recommend you give it a shot!

The future of investing is bright, and I hope you’ll consider reaching out to learn more about investing through Sydecar.