Every VC blog tells you to focus on syndicate investing. I'm here to tell you that's terrible advice. I've seen more startups fail because of a premature obsession with syndicate investing than almost any other reason. Here's the counterintuitive truth about what you should be focusing on instead.
The Framework That Actually Works
Here is a simple framework for evaluating syndicate investing. It's not complicated, but it requires discipline.
Step 1: customer feedback is the only metric that matters
This is where most people go wrong. They skip this step entirely and jump straight to execution. Don't do that.
Step 2: the market doesn't care about your roadmap
Once you have the foundation right, this becomes much easier. I've watched founders struggle with this for months when the answer was staring them in the face.
Step 3: Iterate relentlessly
Nothing works perfectly the first time. The companies that get syndicate investing right treat it as an ongoing process, not a one-time project.
What I've Learned From 79 Companies
A few patterns in syndicate investing come up again and again.
The founders who handle syndicate investing well understand that the data tells a different story than your gut.
The Numbers Don't Lie
Investing early in syndicate investing can be the difference between raising your next round and running out of runway.
One of my portfolio companies went from struggling to profitable in under a year after they finally got serious about this. The founder told me later that they wished they'd started sooner.
This connects to broader themes around syndicate investing, rolling funds, portfolio construction that I've been thinking about a lot lately.
Wrapping Up
I've shared a lot here, and I know it can feel overwhelming. But you don't need to get syndicate investing right on day one. You just need to get started and keep improving.
Founders who do well at syndicate investing tend to share one trait: they're relentlessly practical. They don't chase perfection. They chase progress.
That's the mindset I'd encourage you to adopt. Start where you are. Use what you have. Do what you can. And keep pushing forward.
As always, I'm rooting for you.
Frequently Asked Questions
Q:What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.
Q:Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.
Q:What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 234 startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.