Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more

The Funderbeam Blog

Articles, interviews, case studies announcements and more.
Welcome to The Funderbeam Blog.

funderbeam
September 15, 2022

Syndication on Funderbeam

Angel networks, accelerators, and VCs find and fund future unicorns and help them grow along the way. 

However, the start-up investment process can involve a lot of time-consuming legal and communication processes, let alone follow-up funding rounds and corporate events.

What is a start-up syndicate?

To keep a simple setup, investors often choose to syndicate a deal, whereby several investors pool capital for a specific investment. 

This is useful for startups as they get the benefit of a varied and potentially diverse investor pool, but only deal with one ‘entity’ e.g. Unicorn Chaser Syndicate.

While this approach is neat for the startup’s cap table, it can also come with administrative burdens such as annual maintenance which often fall on the lead investor’s shoulders. 

Using a Special Purpose Vehicle for syndication

This is often the case when using a Special Purpose Vehicle (SPV), which the investors are using to invest in a company, but there are responsibilities which need to be taken into account.

A Special Purpose Vehicle is a distinct company created for one purpose, in the case of start-up investing, the purpose is to pool money to buy shares in a company.

Having interviewed lead investors all over Europe, we found that most of them had limited investment capacity due to the time consuming (and non-value adding) tasks such as: 

  • Setting up the SPV with a bank account that is very rarely used.
  • Annual maintenance of the SPV (bookkeeping and annual reporting).
  • Becoming the bottleneck of information between the startup and the syndicate investors. 

On top of that, the costs for involving lawyers and accountants for setting up and running the syndicate for 10 years would often end up at €10.000-15.000.

Using the Nominee structure for Syndication

A nominee structure allows a neutral third party, like Funderbeam, to hold securities on behalf of investors.

The nominee legally owns the shares on behalf of the investors, also known as the beneficiaries. This structure allows companies such as Funderbeam to hold, buy and sell assets on behalf of investors, i.e. when investing in a company via a syndicate.

We have an article on the differences between a SPV and the Nominee structure here, which can add a little more colour to the topic.

Benefits of syndication with Funderbeam 

On Funderbeam you will find a legal framework that allows a streamlined fundraising process as well as technological tools to help you with corporate governance and investor communications issues (i.e. voting) in one place. Forget about annual maintenance and daunting tasks, Funderbeam will take care of it year after year. 

Funderbeam Syndication benefits in brief

✓ The Funderbeam nominee or SPV structure eliminates the need to establish and administer an SPV yourself.

✓ Manage syndicate access by invitation or investor pools.

✓ Investment agreements are signed and stored on one platform.

✓ Investor onboarding and cross-border transactions.

✓ Industry-standard KYC and Due Diligence are handled by Funderbeam.

✓ Investors retain rights to the underlying equity.

✓Information sharing and visibility all in one central online location.

✓Investors can trade shares within a Private Trading Pool, available via Funderbeam’s regulated exchange = Liquidity for Investors and Companies.

Secondaries – Funderbeam’s Unique Selling Point

What really sets Funderbeam apart from other syndication solutions is that we have secondaries as the core of our business. 

We can handle OTC transactions easily with just a few clicks, or we can set up private secondary markets for investor networks, where investors within specific BANs, VCs or Accelerators can buy and sell investments like they would on any stock exchange. 

The difference is that they are trading between themselves in a closed environment, where all their syndicates can be made available for further investment or liquidity events.

Our unique ability to provide 24/7 365 trading, offers liquidity to founders and investors, as well as access to further investment by invitation.

In addition to building Private Marketplaces, Funderbeam has a public exchange, in which currently there are over 60 companies listed.

Funderbeam’ Syndication Process 

The syndication process in more detail:

View larger version →

Are you curious to see how it works? Then book a short demo with one of Funderbeam’s funding managers or contact us on markets@funderbeam.com 

Scandinavia:

Baltics:

UK:

Rest of the world:

Read Next
The information about the investment opportunities profiled on this website is provided for general information and marketing purposes only and should not be considered an invitation or inducement to engage in any investment activity. Complete and comprehensive information about an investment opportunity is only available only to investors who have been approved by a Funderbeam group entity.

You should ensure you carefully read the Risk Disclosure Statement before deciding to proceed with any investment or transaction, including making a purchase of securities via the Marketplace. Funderbeam has taken steps to ensure that company and securities offering information is clear, fair and not misleading in accordance with its internal verification procedures. Funderbeam does not provide investment advice or any recommendation to invest. Any investment opportunity on this website should not be considered as an offer to the public and is not directed at or offered to anyone to whom it may not be so directed or offered, or located in a jurisdiction where it is unlawful to do so.

It is important to note that funds are raised, investments are made and trade orders are placed through three investment firm service provider entities: Venturebeam Markets AS (VBAS) (authorised and regulated by the Estonian Financial Supervision Authority under permit 4.1-1/212), Venturebeam Markets Limited (VML (authorised and regulated by the UK Financial Conduct Authority under FRN 794918), and Venturebeam Markets Pte. Ltd., (VB Pte) (licensed and regulated by the Monetary Authority of Singapore under Capital Markets Services (CMS) license CMS100863). VBAS and VML are MIFID investment firms.

This page provides you with an overview of the services provided by different entities belonging to Funderbeam group. In the pages of this website, platform, and documents located on these pages (save to where referred otherwise), we generally refer to the group, which includes group of entities being direct or indirect subsidiaries of Funderbeam Ltd, including VBAS, VML, and VB Pte, as “Funderbeam”, “we”, “us” or “our”.

A Funderbeam client (whether investor or company) is a client of the service provider and under the protection of the requirements of the regulator under which that service provider operates: An EEA client’s service provider is VBAS, a UK/ non-EEA/ non-Singapore client’s service provider is VML, and a Singapore client’s service provider is VB Pte.

The applicable Funderbeam service provider has, prior to the offering of the investment offer on its Platform, verified from public registries in reasonable levels of due diligence, notwithstanding the due diligence which is also performed by the Lead Investor where applicable, which will cover at the minimum: a. that the project owner has no criminal record in respect of infringements of national rules in fields of commercial law, insolvency law, financial services law, anti-money laundering law, fraud law or professional liability obligations in all jurisdictions where practicable for such checks to be conducted; b. that the project owner is not established in a non-cooperative jurisdiction, or in a high-risk third country as set out by the Financial Action Task Force (“FATF”), and/or other government directives in jurisdictions where Venturebeam is operating.

The Marketplace is operated as an organised market by VB Pte., in Singapore as a Recognised Market Operator (RMO) under the supervision of the Monetary Authority of Singapore. VBAS and VML are Trading Members of the RMO’s Marketplace. Access to the Marketplace for EEA and non-EEA clients is only provided by and through such clients’ service provider (ie VBAS or VML). The Marketplace does not provide services directly to investors outside Singapore.

With respect to any securities or investments offered by a US domiciled Fundraising Company, by visiting this site you confirm you are not a US resident or US person (as defined in Regulation S of the U.S. Securities Act of 1933) and you understand and agree that you are not acquiring any Investments for the account or benefit of any such US resident or US person. No investment opportunity in a US domiciled Fundraising Company is directed at US persons.