The rise of early stage investment syndicates and special purpose vehicles organized on platforms such as AngelList, have changed the structure of early stage investing in many ways. For investors, these syndicates provide a lot of advantages: Deals get done faster, and financiers have access to broader deal flow and more investment options.
But there is a dark side to these new investment vehicles. Online syndicates typically have deal-by-deal carried interest, a structure that is worse for limited partners than the fund-wide carry common with investments in venture capital funds.
The Dark Side of Deal-by-Deal Carry
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