At LearnBoost, we're taking the "mass syndication" approach to our fundraise. So far, it's going well. But like any decision in life, there are pros and there are cons. When this "mass syndication" approach goes well, things are amazing: multiple VC's fighting to lead your next round, great relationships get formed, VC's compete to prove their value to you with one awesome intro after the next, etc. When this approach goes poorly, well, you're screwed. Plain and simple.For various reasons, this approach to fundraising made sense for LearnBoost. And without discussing in depth why we went the "mass syndication" route or the detailed pro's and con's, there are two main reasons why I call it a party round: it's more fun and mass syndication is actually like hosting a party.
On the fun point, what's cooler to say: "mass syndication" or "party round"? This alone is a "no brainer" reason to call it a party round.
More importantly, mass syndication is like hosting a party. Imagine you're hosting a party and have a bunch of guests over. None of your guests know each other that well. You are the host, so your main task is to make sure everyone is having fun. What are your potential outcomes on that night? Well, two scenarios are likely to happen.
The first scenario is that one of your "marquee" guests (in this case, a VC in the round) starts having a lot of fun. Fun is infectious (just like success is infectious) and this means that the second guest is going to have fun. Pretty soon everyone is having a blast.
Before you know it, as the host you're the life of the party. Everyone wants to talk with you, people want to see how you're doing, and people even invite you to cool stuff later on because they're having so much fun at your party (this is like getting follow-on funding in the form of a big round on your terms). That's the "very good scenario".
The second likely outcome is that one of your "marquee" guests starts having no fun at all. This is similar to when you're not doing well as a startup. Even if it's not your fault, people think a lame party IS your fault since you're the host. You know when you're at a party and there's that guy who sulks and pretty soon everyone is in a bad mood? Well imagine that the guy is sulking, calling people names, and generally being a jerk. That's also infectious. That's why you're screwed if you do a party round and things are not going well... or at least people can't see things getting better.
This is why a party round is a great name for "mass syndication." In a party round, things can quickly get out of control in a very good way or in a very bad way. If you're doing poorly and you have multiple investors (guests), then they'll rapidly head for the exit one right after the other. And guess who is left with the mess?
As the host of the party, you're stuck cleaning up all by yourself.
