Our final post on syndicated investment will take you through the ins and outs of Equitise’s model – how we’ve established it and how investors and companies can get involved. Take a look at our earlier posts on the evolution of syndicate investment, its importance and its all-important feature, carried interest.
What Is A Syndicate?
For those who haven’t tuned into our previous posts, here’s a quick round-up: syndicates are groups of investors, ‘backers’, brought together by lead investors, ‘leads’. They invest in businesses jointly, as a single unit.
Leads are typically experienced, seasoned investors with access to investment opportunities. Syndicate members benefit from leads’ expertise and deal flow, ‘piggy-backing’ on their deals. In exchange, leads receive carried interest: a larger share of the investment’s profit than the other syndicate members.
Why Participate In Syndicated Investment Through Equitise?
For leads, we provide an easy and convenient platform to execute investments, gather investors, and discover new investment opportunities. We remove the hassle of investing by taking care of the administration, and supplying our online platform for simplicity and transparency.
For backers, we allow you to connect with experienced investors and access deals that are usually reserved for private or wholesale investors. We provide a solution to the knowledge gap that exists for retail investors; you can partner with investors who are well versed in industries unfamiliar to you.
What Is The Minimum Investment?
Typically, the minimum set on investment within the Equitise platform is around $2,000 for syndicated deals.
Is It Restricted To Wholesale & Sophisticated Investors?
As you may know, Australian laws require investors to meet certain income and asset requirements to qualify to invest on our platform, however in New Zealand anyone may participate.
Typically, investors who gain access to private syndicated deal flow on Equitise are either wholesale or sophisticated investors. However, any platform member has the ability to request access to private syndicated deals and it is up to the lead within the syndicate to accept or reject them as a syndicate group member.
Why Aren’t All Syndicate Deals Public?
There are several factors in deciding whether a deal will go public or remain private. This decision may rest with the lead Investor’s investment strategy or the business receiving the capital. A lead may choose to keep the deal private if they are targeting specific investors, or if information is sensitive and inappropriate for the wider platform membership base.
How Are The Shares Held?
Shares are held with the Equitise nominee. We use and manage this structure to benefit both the investor and the issuer. For the issuer, this structure provides the benefit of a large investor and a single name on the shareholder register, but avoids giving up rights to a large shareholder base.
Who Handles The Documentation?
Equitise will handle all investment documentation for syndicated deals. Equitise automates all administrative tasks regarding the closing of deals through our investment platform. On-going reporting is handled by the Equitise nominee and our internal investor relations team. This is a streamlined process and is beneficial for investors and issuers raising capital.
Can Syndicate Members Participate In Other Syndicates?
Equitise is building an open and inclusive investment ecosystem. We provide a solution to the fragmented nature of investing in Australia and New Zealand. For this reason, we encourage investors to explore our investment platform and interact with other syndicates.
We strongly believe that leads will not see their investor base diminish, as they will receive interest from investors from other syndicates. We are building a sustainable network of investors to expand members’ private investment networks within our platform.
What Are The Fees To Invest In Syndicated Deals?
To get the benefit of accessing high quality syndicated deal flow from VC funds, family offices and angel groups, Equitise charges a nominal 5% fee to manage the nominee on behalf of the investee business until exit. Leads will also take a portion of profits, in the form of carried interest, as an incentive to share their deal flow and expertise with a wider range of investors. Carried interest usually ranges from 5% to 20%.
That ends our overview of Equitise’s syndicated investment platform. If you’d like more information, check out our website or get in touch – we’d love to hear from you.