When syndicating is outsourcing an investment decision

There are a few good reasons to syndicate an investment:

  • More & deeper pockets around the table
  • Complementary set of experiences
  • Complementary set of networks
  • Complementary set of personalities to help the company
  • Entrepreneur may not want to rely on just one institutional fund / good to have a balance

I am sure there are more – basically they are all about assembling the best “capital team” for a company.

There are also a few bad reasons to syndicate:

  • To make you feel better about your own investment decision
  • To increase chances your partners will support the investment
  • Because it’s what you do
  • Etc.

When you are syndicating to make you and your firm feel better, you are practically outsourcing your investment decision. It may be important to remember then that we earn fees and carry to make investment decisions.


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