Does anyone else notice what is missing from the syndication topics? Syndication is a sure fire way to make sure the best deals go somewhere else. It also means your syndication partners may not be there for you for the smaller deals that are left over, leaving the Angel without the ability to invest. Dealing with this problem is not one of the topics.

A lot has been said about the difficulty of making the fund raising rounds just within TCA. Now we are talking about doing it statewide and nationwide and possibly internationally. Naturally the distance will add to the difficulty.

The only way to make the process easier and more profitable for both sides is if Angels stop following gimmicky selection processes and decisions that appeal to their heart strings instead of the market.

Angels need to stop putting opportunities with the potential of a home run exit up against research projects and opportunities with little or no hope of an exit. For example, if you are going to have a contest, stop comparing apples and oranges. Having a prize of "best pitch" does not mean all the opportunities have equal business value. What good does it do anyone to know that a research project pitches better than a business opportunity? Have a contest specifically for those opportunities that have home run exit potential, and you can have contests for other specific categories as well. After all, that's exactly how Angels will be judged by other Angels when it comes to syndication.

If Angels don't do a better job of classifying opportunities that are presented to them, both syndication and profits are going to remain difficult for them because there is no reason to syndicate without a high enough quality deal. It has been shown that investing in NASDAQ companies makes more money than venture capital. Therefore at the very least Angels should be following the example of these NASDAQ companies on how they choose which technologies to bring to market.

That's where the 20% figure we keep hearing VCs say they are trying to make comes from. In order to stay in business they need to at least match or do better than what individuals could do for themselves investing in NASDAQ companies. Of course they are not going to hold themselves to a higher standard than they need to. We are not going to hear VCs say that they should be held to a 25% or 30% standard.

So Angels, are you at least following the example set by NASDAQ CEOs on how to beat VCs? If not why would anyone want to syndicate with you on a deal you bring them? Angel investors have suffered from lack of returns these past ten years or so. If they don't get serious about following selection processes that are known to work, syndication will follow in the footsteps of those that have failed prior to syndication.

As an Entrepreneur, when you tell me you need to syndicate and you are not showing me a good track record, you are telling me two things:
1. Not only you don't have the money,
2. You also lack the credibility to attract more investors.
Which means you are a waste of my time as a starting point; you can't be the one I start my fundraising efforts with.

Entrepreneurs must seek out those Angels with the ability to attract other Angels based on the Angel's successful track record. This means those few Angels with the adequate reputation for syndication will be receiving the bulk if not all of the best opportunities and it also means they will have more than they can handle.

Angels typically wait for someone they find credible to tell them what is a hot investment or sector. Then they move into it without doing enough homework. But with all the best deals going to those Angels that show they adhere to proven selection methods, such as that of NASDAQ companies that regularly beat venture capital, Angels who aren't willing to do their own homework and thereby build their own reputations will just have to hope that they luck into being asked to join someone else's big exit investment.

There are not enough credible Angels around so that all Angel investors can have the chance of joining them on a big exit. If Angels don't want to be left out of big exits, they have no choice but to start building their reputations as someone with the ability to attract other investors, then they will be approached by the best deals. Otherwise the best deals must avoid them as a waste of time.

Syndication does nothing to ensure a large exit. Basil Peters approach of exiting fast and exiting often does not help someone syndicate. Syndication means that the competition among deals will be even greater. Angel group "A" wants Angel group "B" to syndicate with them, but "B" went with Angel group "C" who had another opportunity with a larger exit potential, so "A" was left with not being able to invest in any deal.

Syndication means that competition among Angles to be a part of a large exit opportunity just got tougher. The only way for an Angel to guaranty not being left out is to build their reputation as a successful investor.