Over oysters and craft beer at the new Row 34 restaurant in Fort Point this Thursday, the high-tech investment team from Cambridge-based Atlas Venture will make an unusual proposition to 16 entrepreneurs: Invest our money as you see fit, no questions asked.
Those who accept the offer will join an exclusive club called Boston Syndicates, whose members are given unchecked power to spend the firm’s money on promising Massachusetts startups, $250,000 at a time.
The only catch is that members must invest some of their own money, too.
The group, which was formed late last year and has 14 members so far, is composed of what folks in the startup world call angel investors — individuals who bet their own money on early-stage companies they believe in, as opposed to investing in venture funds controlled by others. Angels are often entrepreneurs who achieved success with their own startups and think they have an eye for young businesses capable of doing the same.
Atlas believes some have eyes so keen that the firm is willing to put its money wherever they do. The idea is that angels who are part of the local tech business community might be able to spot the next hot company before venture capitalists do.
“We said, ‘Anything you guys do, we will automatically back you,’ ” said Atlas partner Jeff Fagnan. “‘We don’t even need to screen the company.’ ”
Atlas declined to identify the prospective Boston Syndicates members who will attend the dinner, but the current roster includes DataXu cofounder Mike Baker, Azuki Systems cofounder Cheng Wu, and Visible Measures founder Brian Shin. The venture firm has made five investments through Boston Syndicates already.
The arrangement works like this: Whenever an angel who is a member of Boston Syndicates invests a “significant” amount of money in a Massachusetts tech company, Atlas Venture will invest $250,000 in the same business. The definition of significant is flexible, Fagnan said, but is probably at least $10,000. As a finder’s commission, the angel gets 20 percent of any profits Atlas earns on the investment, on top of the return on his own investment.
Boston Syndicates member Lars Albright, cofounder of the mobile advertising firm SessionM, said he doesn’t mind letting Atlas piggypack on his investments. The partnership helps him, too, and not only because there is potential for extra profit.
“It makes you a more attractive investor to an early-stage company, especially if they’d rather not deal with a ton of investors,” said Albright, who is working on his first Boston Syndicates investment. “Your $50,000 check becomes a $300,000 check.”
Still, it’s an unconventional model that places a lot of faith in people who are not investors by trade and sometimes spend money in ways that can seem carefree.
Another Boston Syndicates member, Fred Shilmover, has made only a few investments on his own and said he was stunned when Atlas offered to give him so much power over its purse.
“When Jeff [Fagnan] asked me to join, I said, ‘Are you sure?’” recalled Shilmover, founder of InsightSquared, which provides sales force analytics to businesses. “I’d make a terrible venture capitalist.”
Unfazed by Shilmover’s inexperience, Atlas Venture will let him and the rest of Boston Syndicates pick its investments.
“I’m not sure it’s going to work,” Fagnan conceded, laughing. “We’ll watch and see how they handle the responsibility.”