Launching a venture fund is exciting, but increasingly complex. Today’s LPs expect more than a sharp thesis or ambition; they want proof. For first-time fund managers, the path to that proof starts not with a fund but a syndicate.
At Angel School, a two-stage approach is strongly recommended for first-time managers. As Jed Ng, founder of Angel School, explains in this article, managers should:
- Start with a syndicate to build a track record, engage LPs, and validate their investment thesis.
- Raise a formal fund only after establishing traction, collecting relevant data, and earning credibility in deal flow.
This structured approach reflects the realities of today’s venture ecosystem, where a bright start can make or break long-term success.
Syndicates are not just tactical vehicles for deploying capital. They’re strategic platforms for building a visible track record, sharpening your investment process, and earning the trust you’ll need when it’s time to raise institutional capital.
Here’s how and why starting with a syndicate can position you for long-term success as a fund manager.
1. Prove Your Strategy Without the Fund Overhead
Syndicates offer a frictionless way to begin executing your investment thesis. Unlike a fund, which requires upfront capital, regulatory compliance, and long timelines, a syndicate allows you to go deal-by-deal, validating your sourcing, diligence, and decision-making in the real world.
Each deal is a test of your investment judgment. Each investor who joins is an early believer. And each founder you back becomes part of your narrative.
2. Build a Track Record LPs Can See
Limited Partners (LPs) are inclined to invest in managers who have demonstrated tangible results, and syndicates make these results visible and accessible.
By sharing performance updates, highlighting co-investors, and showcasing founder feedback, syndicates provide transparent milestones that enhance your credibility with prospective LPs. According to PitchBook’s Q1 2024 Analyst Note, over 247 first-time managers who closed funds between 2019 and 2021 are projected to be unable to raise a second fund, underscoring the importance of a proven track record.
3. Learn the GP Playbook Before the Stakes Get Higher
From allocation strategy and portfolio construction to investor communication and compliance, syndicate leads learn the foundational skills of fund management, without the regulatory burden of managing LP capital under a committed fund structure.
You don’t just build a portfolio, you build operating experience that gives you confidence, systems, and investor discipline.
4. Build a Community, Not Just a Cap Table
One of the most overlooked advantages of a syndicate is the network it creates. Every backer isn’t just capital; they’re a potential LP, co-investor, or referral partner already aligned with your thesis and decision-making.
Each founder you support becomes a future validator of your value, able to speak to how you operate and support their journey.
Over time, your syndicate becomes more than a deal vehicle, and it’s a trusted ecosystem. You’re deploying capital and building alignment and credibility with stakeholders who can champion your future fund. When it’s time to raise, you won’t need to start from scratch; you’ll have a community ready to back you.
5. Use Syndicates as a Smart, Strategic Entry Point
Syndicates remove the friction of launching. There’s no need to raise a multimillion-dollar vehicle before investing. You can begin with one deal, a memo, and a circle of investors.
They also benefit from simpler compliance setups in several jurisdictions, such as Singapore or the U.S., and are far more cost-effective than traditional fund structures.
Syndicates are your MVP as a GP. They let you go to market, collect feedback, and refine your investment identity without waiting for institutional validation.
6. Raise Smarter, Not Harder
With more capital than ever available to proven managers, emerging GPs often underestimate the importance of momentum. PitchBook’s data shows that first-time funds have decreased significantly, from 162 in 2018 to just 87 in 2020, due to increased scrutiny and higher LP expectations.
A syndicate helps you rise from a position of strength. You’re not asking LPs to leap of faith, you’re inviting them into a process they’ve already seen succeed.
Syndicates are not a step down from a fund but a step forward. They allow you to sharpen your thesis, build trust, and generate real results before raising institutional capital.
Start with one deal, build one relationship, deliver one win. That’s how reputations and, eventually, funds are built.
