Start your own mini VC: the founder’s guide to syndicate investing
Throughout the last six months, I’ve been sharing different ways founders, like yourselves, can build extra income streams.
We’ve talked about investing in property and the very many different ways to do that. We’ve discussed how you can get paid to share your story at events, via speaking roles or by building a really strong personal brand. We’ve covered how you can create a members’ community that stays. Even how you can get paid in equity instead of cash.
The idea here is simple. As a founder, you’re already building something valuable. But you can also create other income streams alongside your main business. Some call them side hustles, others passive income streams. In fact, as new research reveals, nearly half (47%) of Brits are now running a second income stream.
Today, I want to talk about another one. One that most founders don’t realise is possible.
Starting your own mini VC through syndicate investing.
What is syndicate investing?
The name sounds complicated. It isn’t. A syndicate is simply a group of investors who pool their money together to invest in a startup. Instead of just one person (or investment company) writing a huge check, lots of people invest smaller amounts. Together.
One person leads the deal. They find the startup. They negotiate the terms. They do the research. Everyone else in the group then decides something very simple: Do I want to invest in this … or not? If you like the deal, you join. If you don’t, you skip it.
But here’s the interesting part for founders. You don’t just have to join a syndicate. You can start one, too. So, instead of just building one company … you can start investing in others too, and over time, you build something powerful. Your very own mini venture capital engine.
TIP: It’s important to note though, that in order to do this, you’ll need to be a certified investor. To do so, be sure to be certified as a High Net Worth Individual (HNWI) or a Sophisticated Investor. Each has different requirements and being certified simply means that you can safely invest.
Why founders are perfectly placed to start a syndicate
Most founders are already doing half the work of a venture capitalist without realising it.
You hear about startups first
You’re constantly meeting other founders – at networking events, award shows, conferences, even members’ clubs or communities. When founders are raising money, they usually talk to other founders first, not investors. They’ll likely ask questions like:
- “Do you know anyone investing right now?”
- “What valuation are you seeing in the market?”
That means you often hear about startups raising before the round is widely known.
You can spot opportunities early
Founders understand problems in a way most investors don’t. You can recognise:
- When someone is solving a real pain point
- If a product actually makes sense
- Whether the founder has the grit to survive the rollercoaster
After all, you’ve been in the trenches yourself. That perspective is incredibly valuable. A lot of investors spend years trying to build networks that give them this kind of access. You already live inside it.
Turning access into opportunity
Starting a syndicate simply turns your access into an opportunity. Instead of just thinking ‘that’s a cool startup’, you can actually invest, and bring other investors along with you.
Over time, this becomes powerful.
The benefits of running a syndicate
You see why starting a syndicate is exciting? Now let me show you why it’s actually worth your time.
Better deals
We established in the last section that founders talk to other founders a lot more than they talk to traditional investors. When you back one great company, suddenly more founders start reaching out to you. You’re seeing opportunities before most investors even know they exist. It’s like having the insider scoop … but without breaking any rules.
An incredible network
You’re not just investing money, you’re building relationships with investors, operators, builders … people who know how to actually get stuff done. These are the same people who might back your next startup, or even collaborate with you down the line.
As Reid Hoffman, Entrepreneur and Venture Capitalist, said: “No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team.” So, there’s real benefits from growing this network of peers.
Financial upside
Most syndicate leads earn something called carry. Fancy word, simple concept: if a startup you backed succeeds, you get a slice of the profits. One big exit can make the effort totally worth it.
Portfolio growth
Instead of putting all your eggs in your own startup basket, you’re quietly building a mini portfolio of other companies. Sure, some will fail, that’s part of the game. But every once in a while, one hit can completely change the picture.
Investor training
Running a syndicate is essentially a crash course into how investors think. You get better at spotting great founders, understanding deal structures, and seeing how venture capital really works behind the scenes. Think of it as a rehearsal for running your own fund one day. Or, at the very least, a way to make your founder journey way more interesting and educational.
How to start your own syndicate
Let’s get practical. Here’s how a founder can actually start their own syndicate.
1. Line up your first investors
Every syndicate needs people to invest alongside you. Without them, there’s no pool of capital and no deals.
Start with your network. Reach out to people like former colleagues, founders you trust, friends who know startups. Make it easy for them to say yes by telling them the benefits. Benefits like:
- It’s free to join.
- I’ll do all the work. Finding deals, writing memos, negotiating terms.
- You just decide if you want in or not.
Early members bring money, but also credibility. Having experienced operators or advisors in your syndicate makes startups founders take you seriously.
2. Source the deals
Next up: dealflow, which essentially means the startups you can invest in.
Start small: founders you already know who are raising. Ask: “Would access to a small team of advisors and investors help you grow your company?”
Founders respond yes almost every time. They’re not just looking for cash, they want smart, supportive investors.
As your syndicate backs more startups successfully, more founders will want to raise from you, and more investors will want to join. This is the flywheel that keeps your syndicate growing.
3. Vet the opportunities
Not every startup is worth your time, or your investors’ money.
As the lead, your job is to do an initial pass on every opportunity. Sometimes, you can bring in a partner or co-lead to help filter deals. Only the strongest startups make it to the wider group. This ensures your members only see quality opportunities and trust that their time is well spent.
4. Make sure you get SEIS/EIS tax relief
One of the biggest perks of investing in the UK is SEIS/EIS tax relief. And yes, you can still get it when you invest through a syndicate, but only if both you and the deal are eligible.
Some syndicates only back SEIS/EIS-eligible startups, so check early. Ask the founder and your co-investors if the deal is SEIS/EIS-friendly and if you’re eligible.
Once the round closes, make sure you get all the paperwork you need to claim the relief on your self-assessment. Keep in mind, your eligibility depends on your personal situation, so it pays to stay on top of it.
5. Share the deals
Once you’ve done the homework and vetted a startup, it’s time to share the deal with your syndicate. Don’t just drop a bland email; make it interesting and useful. Give them the story:
- Why this team is the one to solve the problem
- Evidence that they really get their customers
- Proof they can actually sell their product
- How big the market is
- Any potential risks upfront
Your best bet here is to keep it extremely honest and transparent. Your members need to trust you, and the founders need to know you’re backing them in the right way.
6. Members decide
Now it’s time for your syndicate to do its thing. Members decide:
- Invest if they like the deal
- Skip if they don’t
Everyone gets the same terms as the lead, no negotiation needed. It’s clean, simple, and low-pressure.
Final thoughts
Okay, so we’ve laid it all out for you.
But, before you rush into it, there are a few things to keep in mind.
Running a syndicate isn’t a passive side hustle that you won’t need to put any effort into. It takes a lot more time than the other additional revenue methods I’ve written about for Startups Magazine in the past.
However, if you love building, spotting talent, and connecting people, it’s incredibly rewarding. You’re shaping the next generation of startups and learning the ins and outs of venture investing firsthand.
Do it right, and you could create serious upside for yourself, all while growing your own company. In other words, it’s challenging, but also pretty damn exciting.
Part five of a five part series.
