Forming an International Syndicate – Lead Angel Experiences

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The Nordic Angel Program by FiBAN finished its first investor training and investing batch at Arctic15 in May. The program made a group investment in Screenful worth 115.000 euros by 14 business angels. What were the documents signed, what were the tools and how did the group form. Read the experiences from closing the international angel syndicate by business angel Reima Linnanvirta.

SHORT INTRO AND BACKGROUND AS AN ANGEL INVESTOR + INDUSTRY INTEREST 

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I have an entrepreneurial background from business consulting and have been a full time investor after exiting my previous firm. I used to work a lot with M&A and financing, and that got me stumbled into the world of angel investing. My investment focus is pretty wide, typical targets are in B2B (and have a product and business model that I can understand).

WHAT GOT YOU EXCITED ABOUT ANGEL INVESTING?

I’ve been twice an entrepreneur myself. While I love the excitement of creating and growing a business, it is quite stressful in the long run as well. As an angel investor I can still enjoy the excitement and energy without the stress. Also, I find it great to share my experience in order to help people with vision and energy to achieve their dreams.

​WHAT MADE YOU ATTEND THE “NORDIC ANGEL PROGRAM BY FIBAN”? 

I’ve looked into expanding my investments abroad and widening my network of fellow angels; NAP provided a natural way to move towards this goal. (Also, NAP coordinator Reetta is a heck of a saleswoman and didn’t take a “no” for an answer.)

HOW WAS YOUR ROLE AS THE LEAD INVESTOR?

Coordination, coordination, coordination and… The role as a lead was mainly to be the bridge between the investors and the companies selected in the final stages of the program: Coordinating the due diligences, coordinating the process to select the winner, negotiating final terms, coordinating the investment documentation flows and setting up structure of the post investment decision making and communication of the syndicate.

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AS THE LEAD ANGEL, COULD YOU SHORTLY DESCRIBE  WHAT THE NAP ANGEL SYNDICATE CONSISTED OF? 

The syndicate was rather large as we had some 15 angels onboard. I would say we had quite a diverse group: There were some very experienced investors as well as newcomers. Also the backgrounds and industry expertises were very wide. This actually provided to be very useful: While we ended up screening almost 200 companies in all walks of life, there was always someone with relevant experience to assess the case.

SHORT INTRODUCTION OF THE SYNDICATION PROCESS

Recruiting of potential lead by FiBAN > recruiting of investor participants > Group investment trainings > Group evaluation of startup by Arctic15 > Due diligence of the favourite startups > Investment proposal and closing

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COULD YOU HIGHLIGHT THE MAIN JURIDICAL POINTS OF THE INVESTMENT 

We ended up in each investor making a direct equity investment into the company. The syndicate decision making was covered by a syndication agreement. This together with the shareholders’ agreement enables the syndicate to act as one in key decision relating to the company.
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We also discussed using an special purpose vehicle for the investment, but this was abandoned due to costs and administrative burden. Also, as we had a Russian investor in our syndicate, using an SPV could have created tax issues for him due to controlled foreign company regulations.

WHAT TOOLS WERE USED IN THE PROCESS?

We used StartUp Includer for screening the companies, Invesdor was used for fund transfer and ContractZen for electronic signing of the investment documentation. For communication we used videocalls, WhatsApp group and Google Docs.

WHAT WAS THE MOST VALUABLE PART OF THE “NORDIC ANGEL PROGRAM”? 

​For me the most important part was expanding my network and learning from my colleagues.

​HOW WAS YOU EXPERIENCE EVALUATING THE STARTUPS IN A GROUP? 

​Excellent. And very educating: With 15 angels someone was always able to come up with a view that you haven’t thought of.

HOW DOES THE ANGEL SYNDICATE COOPERATE AND COMMUNICATE FROM NOW ONWARDS?

​We have set up a structure in our syndication agreement for the communication and decision making between the syndicate members as well as election of board member representing us in the board of directors. The board member (Ali Omar, co-lead of the syndicate) is responsible for ensuring fluent communication between the company and the syndicate.

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​​HOW IMPORTANT WAS THE NAP FACILITATION SERVICE FOR THE SYNDICATE? 

We wanted to give all the syndicate members opportunity to participate as much as possible. With a group of this size it naturally created challenges from coordination point of view.
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With 15 successful investors onboard you also have 15 personalities and 15 busy or extremely busy persons. So having the NAP support was crucial in the neverending deal lead task of herding cats.

​HOW DO YOU SEE THE FUTURE ROLE OF CROSS-BORDER GROUP INVESTING?

​I believe it is as important to have diverse group of investors in a company as it is to have a diverse team in a company, so I am hoping to see more international angel syndicates forming up.

​NORDIC ANGEL PROGRAM’S 2ND BATCH IS STARTING SOON. WILL YOU BE INVESTING AGAIN? 

Definitely! I will join the Finnish NAP by FiBAN, but also the Estonian NAP by EstBAN.
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