Some of the smartest investors once sat on the entrepreneur’s side of the table. This is the story of one such investor.  

Zach Coelius has played in almost every part of the startup funding world. He likes to use the metaphor of a Roman gladiator arena: Entrepreneurs are the gladiators, facing the toughest battles, and venture capitalists are the spectators taking bets on who will win. 

Over two decades, he was a gladiator himself, founding a variety of companies and acquiring funding for them along the way. After a successful exit from one of those, he fell into the world of angel investing. 

That led him into deal syndications on AngelList. One of those deals was for Cruise, a self-driving car company. When Cruise took off, Zach’s reputation did, too. 

“When the Cruise exit happened, everyone suddenly thought I knew what I was doing. The momentum started,” he says.  

After some time in the angel investment sector, Zach experienced a natural foray into operating as a solo GP. On an episode of the How I Raised It podcast, Zach shares his journey from entrepreneur to angel investor to solo GP. While his route may have not been typical, it’s yielded great results — most recently, a $33 million raise as a solo GP. Here’s how it all went down. 

From entrepreneur to angel

Zach says that he “fell into” angel investing. As a founder, he often helped his fellow founders find funding by identifying good matches and making introductions. 

“If you can introduce a founder to a VC and the VC funds the deal, then everybody owes you a favor,” he explains. “It's a beautiful place, to sit and add a lot of value connecting the right people.”

When he introduced the founders of Branch Metrics (now Branch) to their seed investors, AngelList was new to the scene. He asked if Branch would mind him listing the deal for syndication on AngelList and raised $200,000 overnight. 

At that point, he felt like he was onto something big. He continued posting interesting syndication deals on AngelList. When he was fortunate enough to be on a deal with Cruise and had a successful exit, more and more people put stock in the deals that Zach found. 

Capital, compensation, and ‘carrying’ on

The best part of Zach listing deals on AngelList? He rarely touched his own funds to back deals. 

“I’ve never invested my own capital because I never had much capital to play with. In retrospect, I was there at the very beginning of Uber, Airbnb, Dropbox — $10,000 checks would have done some pretty awesome things there. But I wasn’t doing that,” Zach says. “I put in a little bit of my own each deal, but [it was] effectively other people's capital via the syndicates. In the beginning, I would literally write checks for $1,000 per deal.”

By syndicating deals, he was able to take a percentage of the carry from the deal. Carry operates like commission for whomever facilitates the deal — which, in this case, was Zach. By making appealing deals accessible, he’s taking some of the hard work out for investors — which deserves compensation. 

All about syndication

Let’s peel back the cover on syndications. On sites like AngelList, accredited investors can register and browse syndicated deals listed by people like Zach who have their ears to the ground in the startup space. These deals typically already have a lead investor and set terms. 

If an investor wants to put their money into it, they sign up for an email list to learn more about a particular deal. No money changes hands on AngelList, though. It’s more like a dating app for finding investment deals: The dates — or rather, deals — still happen off the app. The money goes into an SPV (special purpose vehicle) so all investors are pooled into one legal entity for that investment round. This makes for a cleaner cap table than having a bunch of small investors gumming it up. 

Then Zach’s compensation would come from the carry on the deal. Typically that’s a 20% cut, but he takes 15%. 

Leading with confidence

With an abundance of deals on AngelList, how do investors choose the best ones? They look to the lead investor. 

“The real secret is, until you build a track record with big exits and until people think they know what you're doing, the real secret is to do deals that have VC leads. So if Sequoia is leading a deal, or Andreessen or Benchmark or any of those folks, and you get an allocation alongside them, great. Then people will invest in that deal because they trust the VC lead.”  

And how do you get in good with VCs? Start with founders. 

Most people approach VCs asking for good deals, but it’s smarter to take the other path. If you talk with founders and find out what they need, you can match them to good VCs. Once again, it’s that circle of benefits: You help the founder, the VCs, and your own reputation. 

Fire up the vehicles

Zach took a gradual approach to becoming a solo GP. He raised his first fund in 2017. It was just $1 million on AngelList, with some investors he’d collaborated with in the past. All funds have already been recovered there, with the potential for the companies in that portfolio to go up to 10x in the future.

The second fund was more of a happenstance.

“Some industry guys basically said, We’re gonna make an offer you can’t refuse. So I said yes. They were like, We’ll do two funds with you and we’re the sole LP. So we put that in place as two $45 million vehicles at the end of 2019. And I started deploying off of that,” Zach says. 

But not far into deploying those $45 million funds, Zach realized they were going to need more capital. He then put together a fourth fund with multiple LPs involved.

“I actually run four vehicles,” he explains. “I'm currently deploying off of my early-stage main fund, which is $33 million, and my rolling fund on AngelList, which anybody can participate in, which is about $4 million a year right now. Then I have a $30 million opportunity vehicle, and then the AngelList syndicate.”

Flying solo

Zach’s decision to operate as a solo GP wasn’t necessarily intentional — it was just how his career evolved. Still, he finds some major benefits to flying solo.

Rather than having to wait for approval of a large committee at a quarterly meeting, Zach can move quickly on deals that are worth the squeeze. That agility translates to being able to get more return for his investors, both LPs and angels. 

Operating alone also lets him take chances on deals that more stodgy investment firms might pass on. He takes pride in taking more “idiosyncratic” deals, such as MUD\WTR in the consumer packaged goods space.

“I do think there’s some value to making idiosyncratic decisions. Doing it by yourself often is how you end up with more idiosyncrasy than you do with modulation of a committee. [Committees] just sort of drives everything to mediocrity,” he says. 

While he’s a bit outside the box, Zach gets to stay flexible on funding companies on the cutting edge. And that’s exactly where he wants to be.