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Deal Sheet is a paid weekly newsletter that delivers the best startup investment opportunities weekly. These deals are being syndicated by 20+ of the best and most active syndicate leads we’ve worked with. All Deal Sheet deals include discounted carry (10% carry versus standard 20%).

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Here are five deals we shared with Deal Sheet subscribers in our first month:

• Deal ex. #1 → Precision medicine company transforming the future of targeted cancer treatment with Andreessen Horowitz.

• Deal ex. #2 → A platform offering bookkeeping, receivables & payables management as an all-in-one SaaS to SMBs with Accel.

• Deal ex. #3 → A startup that sells canned mountain water marketed towards health-conscious consumers who want an alternative to sugary drinks. Est. $200M+ in Revenues.

• Deal ex. #4 → Early stage AI social company with General Catalyst & Kleiner Perkins.

• Deal ex. #5 → Sam Altman backed AI data platform with confidential top tier VC lead.

Letter to LPs - Why You’re Not Getting My Venture Capital Deal Invites

It is common for Syndicate leads to selectively share deals with specific LPs rather than sending every deal to every LP. Each deal has varying levels of sensitivity, and it is important for GPs to invite the right LPs to the right deals.

Founders are counting on the GP to run a tight and efficient SPV process.

Zach and I often discuss the large number of limited partners (LPs) in our syndicate compared to a typical venture capital fund. Traditional VC funds with over $10 million in capital can only have 100 LPs, while those with under $10 million are capped at 250 LPs (source). With 10 to 100 times more LPs in our respective syndicates in combination with the sensitivity of our deals, our syndicates face the unique challenge of having to limit which LPs we can send deals to.

The same goes for the deals we run. Often founders view their memo/round as highly sensitive or less sensitive based on VC interests, product roadmaps, internal strategies, etc. and what they want to get out of the syndicate and its LPs (i.e. do they view the syndicate as a mini-marketing event with preferred broad-based visibility from syndicate LPs - great for consumer play, or does the company just want to work with the Syndicate GP with no other plans to leverage the syndicate LP base).

Founder preferences and LP activity, among other factors, dictate how we roll out our deals to LPs. We can’t send out every deal to all of my ~5,000 LPs. Some of them are not active, or are just lookers (e.g. open deals, but don’t invest), while others are hyperactive and/or write large investment checks. Then there are the most recent backers who are often excited to deploy into the asset class. 

This is an extreme example, but I ran a syndicate two weeks back that was the most sensitive deal I’ve ever run. I worked closely with the company to develop an approach in which we were both happy with. Unfortunately for me, this approach required me to send out 160 individual NDA’s to interested LPs before they could review essentially any deal details. Once they signed the NDA, only then did I manually invite each individual to the deal to review materials and evaluate investing. 

This was certainly a one-off process, but it highlights how sensitive deal details can be and the importance of syndicate leads to run a good/tight process that the company’s founder is happy with. That being said, I hope I don’t need to run a process like that for a while. 

So, to my point of this post…

It’s crucial for syndicate leads to understand their LP base and take more of a data-driven approach when figuring out which LPs should get invited to which deals. 

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Here are 5 important data points I am constantly looking at when deciding which investor gets which deal:

1. # of deals invested in Riverside 

LPs/investors who have invested in at least 3-4+ deals with us have a higher level of consistency and seriousness as an LP and are likely to get invited to the majority, or more of the deals we run. 

Time plays a factor here (which I will get to), but if you have been in the syndicate for 1+ years and have not invested in 2+ deals, it is apparent that this LP will not be very active in deploying capital, which is okay, but we will not be sharing more sensitive, or competitive deals with a smaller allocation. 

So what should you an LP do to ensure deal invites based on # of deals  - invest often (at least 1/quarter). 

2. Average check size of deals invested

We typically have different investment minimums depending on the deal and allocation size, but will offer LPs minimum commitments as low as $1k. Many times I will work with the founders in deciding what they want the minimum to be. I do “coach” them a bit here. The average check size of deals is important as it helps break or group LPs by average check size. We are going to prioritize those LPs that are doing $10k+ checks, and definitely those $25k to $1m. 

Figuring out how you are going to fill SPVs is obviously important, therefore those LPs who are writing larger checks are typically going to get priority as they can put a much larger dent in the SPV allocation. For that reason, they tend to be invited to more deals we run. 

So what should you do as an LP to ensure deal invites based on ave. check - invest a minimum of $10k into the syndicate in total per year.

3. Last Date Invested

The date of last investment is important in getting a pulse on how active this LP is currently. For example, an LP may write $50k or $100k checks but if they have not done a deal in the past 1-2 years, that signals they may no longer be active in our SPVs as we are doing ~50 investments a year. For higher sensitivity or smaller allocation deals, we want to prioritize investors that feel more active and engaged with the syndicate at present.

Our preference is to see LPs invest in a deal or multiple deals in the last 3-6 months, though we will  include LPs in deal invites whose last investment was in the past 12 months if he/she is a large check writer.

As Zach mentioned in a post a few weeks back, some LPs burn out quickly as they overallocate too quickly (we are guilty of that too as we do higher volume deals), therefore it’s important for us to disseminate who is active and engaged, and looking for the next exciting company to allocate to. The more active an LP is in recent months/year, the more frequently they will get access to the syndicate leads deals. 

So what should you do as an LP to ensure deal invites based on last date invested - invest once per quarter at least.

4. Total $ invested in past 3-6-9-12 months

Another way to see how “relevant” or “active” an existing LP in a syndicate is, is to look at the previous 3-6-12 months and see how much capital has been deployed on that timeline. It’s a helpful way to get a pulse on who is active now. 

On the burnout topic, we have LPs in the syndicate who have allocated hundreds of thousands of dollars into our SPV’s which makes that look like a very attractive LP to a syndicate lead, however if all of that money was allocated from 2020-2022 (i.e. no capital allocated in the past year plus), then they are not actually all that active at present and are likely not receiving sensitive deal invites. 

LPs that are more active and have allocated more capital in total in the past 3-6-12 months will likely be invited to the vast majority of deals syndicate leads run. 

5. Date Since Being a Syndicate Member

Part of the beauty of syndicates is that unlike traditional funds, the door is always open for new LPs looking to deploy into startups. That means we are getting new LPs on a daily basis. 

This is important to note and understand when thinking about which LPs should get invited to which deals. We talked more so about # of deals and amounts of capital being deployed by an LP when thinking about who gets invited, however what happens if you just joined? 

My personal take here is that you should get a chance as a new LP to review the best deals I am doing over the first few months before you get bucketed on investment data as a syndicate member. I also want to make a great first impression on new LPs (i.e. both the quality and volume of deals I run) as they join my syndicate. 

To summarize, new LPs have 3 months (typically) to make their first investment without being knocked as “inactive”. I will generally invite those new syndicate members to the majority of deals I run to give them a chance as an LP to better understand which investor profile they fit into. There may be specific, extremely confidential deals however, that are too sensitive to share with new LPs given the lack of data on these LPs. For example, I ran a deal like this last week that only got shared with specific, active LPs. It unfortunately was not worth sharing with a new LP even if they may have been interested in the deal.

As mentioned, many deals are sensitive and highly confidential. Here are a few of the reasons we WOULD NOT share deals with the entire syndicate:

• Limited allocation i.e. we think we will oversubscribe our allocation

• Don’t want to share company-specific info with competitors

• The company may not want $1k checks so they request a higher minimum

• Various sensitivity reasons on the deal, and founders specifically ask to only invite more active LPs

• Catch all → the founder had specific criteria they wanted us to enforce 

We also asked 5 Syndicate GP friends for examples of:

1. Reasons you would not send a deal to your entire LP base?

2. How GPs think about prioritizing LPs

3. Any feedback for LPs in syndicates to optimize their chances of seeing and being invited to the best deals?

See their answers below!

Jeroen Bertrams

We typically only send deals to active LPs and we've actually started removing LPs from our base that have not invested over the past 12 months. This is mostly because we feel that we need to be careful with information sharing. Companies need to be sure that their deck and memo do not end up with LPs which never invest as it seems they may be on the platform for different reasons. Sometimes, we have high profile deals which are only shared with the most active LPs. This way we reward active LPs for their trust in us. If allocation is available, we invite other LPs at a later moment.

Morgan Schwanke

1. If the founder has explicitly asked to keep it tight, or it is clear that is what is in the best interest of the founder / company. If it is clear that I will fill the allocation with a smaller group. 

2. For deals that fit this mold, I typically filter to share with our fund lp's as well as our largest / most active lp's (those that have invested $5k+ w/ us over the last 250 days).

3. Get involved in the fund or stay active in deals to consistently see the best deals

Matt Wilson

1. First and foremost, if the founder has asked us to only share the deal with select LPs rather than the broader group. For example, if we're exercising pro-rata and the founder only wants the opportunity shared with insiders. Additionally, if an LP is known to have invested in (or works at) a competing company, the founder may ask us not to share sensitive information. This is rare, but it does occasionally happen.

   Aside from founder requests, we typically give every LP the opportunity to invest, even though some we know never intend to invest. AngelList runs our backoffice and provides excellent insights into active vs. inactive LPs. They even flag specific LPs as "lurkers" with the option to remove inactive members from the syndicate.

2. I try to share every deal with our entire LP base, but in general, the more active the LP, the more likely they are to see the best deal flow. For instance, if an LP has seen dozens of opportunities but has never written a check, they likely won't receive an invite to fast-moving opportunities with limited allocations. As a syndicate lead, you want to support those who support you, so if I only have $100k in a hot deal, our top LPs have earned the privilege of priority access.

3. The most important thing is to stay active within a given syndicate, even if it means writing $1k into every tenth deal. Syndicate leads can quickly sort LPs by activity, so you want to avoid being labeled a lurker and left off the list when a hot deal comes to market.

Joe Tonnos

1. Depending on the situation, given we utilize AngelList and also run some SPVs directly, we will target LPs based on check size, stage of investment or interest in a particular sector/sub-sector, among other things. That being said, when we are more active in a given time frame, we'll take a more targeted approach to show our LPs we understand their investment objectives, but in a quieter period we will approach our entire LP base to ensure we stay in front of them.

2. It generally comes down to their investment criteria and check size.

3. Get to know the syndicate lead and the types of deals they bring. Many LPs take a rifle shot approach, while others are more shotgun style. As a syndicate lead, we try to take the rifle shot for our LPs by only bringing high-conviction opportunities and a few deals a year, which we hope our LPs respect and appreciate. As with most things in life, it comes down to relationships and we believe having relationships with LPs is mutually beneficial.

David Yakobovitch

1. The deal might be time sensitive, and there are LPs who have invested more frequently as opposed to those who don't invest.  There is also this concept of shadow LPs, who basically don't invest and are simply interested in information rights.  We routinely prune LPs who show no clear interest to participate in our opportunities. This is different from co-investors who seek visibility into opportunities and then invest alongside their fund.  This is is all different from LPs who might be going through liquidity constraints, though they offer introductions to other LPs or co-investors who might participate in the opportunity.

2. It depends on the time sensitivity of the deal and how much allocation is remaining.  If there is only $X allocation, and 3 LPs each give 1/2X, 1/4X, and 1/4X, it is to the benefit of the Syndicate Lead or Fund Manager to have less investors in the vehicle to simplify investor relations and fund administration for ongoing portfolio support.  As the size of the vehicle increases (I.e., 10X+), there is more flexibility for smaller check sizes to make it to final closing instead of the reserve matrix, unless we hit an investor cap size limit.

3. LPs often have passive, active or a hybrid strategy.  If you want to be invited to the best deals, respond even if you aren't interested in a deal.  Offer introductions, offer feedback and suggestions.  If you continuously pass on deals, there is a less likelihood you will be invited to Tier 1 opportunities.  With that said, I do my best to offer access to the majority of our LPs to all opportunities because I remember how I got started, and I'm an advocate to offer venture scale returns across the venture class ecosystem to both getting started angels with smaller capital allocators equally with long-time fund managers who have significant dry powder available.

If you enjoyed this article, check out our past articles discussing GP/LP relationships:

• 🧠From LP to GP → 10 Valuable Learnings for Success as an LP in VC Syndicates

•  😡 Syndicate GPs – Worst Practices & Concerns

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Sydecar is a frictionless deal execution platform for emerging venture investors. We make it easy for anyone to launch SPVs and funds in minutes, with automated banking, compliance, contracts, tax, and reporting so that customers can focus on making deals and building relationships.

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✍️ Written by Zachary and Alex