The Nucleation Syndicate

Nucleation Capital and our affiliates search for and secure select investment opportunities. We prepare a detailed deal memo summarizing information about the venture. We then register the proposed syndicate with Angellist, which creates a deal profile page. We upload all of the required deal information allowing LPs to review the deal. Then we send confidential invitations to syndicate members about the opportunity that contains a link which allows them to read the deal details and decide if they’d like to participate. There is never an obligation to invest.

There is no cost to joining Nucleation’s syndicate to get access to confidential deal invitations. Nucleation does not charge a management fee on syndicated deals. Angellist’s costs of forming the SPV and paying state blue sky taxes are shared pro-rata by all investors who choose to participate. As the sponsor of the SPV, Nucleation is compensated only when the deal is successful through the carried interest fee (“carry”), Carry is paid to Nucleation Capital when the investment returns a net profit over and above the principal amount invested. The standard carry charge is 20% but Fund LPs receive a discount on Syndicate carry. (Note: Nucleation Capital does not act as a broker or finder and is never paid by founders for help raising this capital.)

Fund I subscribers get priority access to all of Nucleation's syndicated deals. Thereafter, if equity remains, Nucleation invites its general syndicate members to participate.

Nucleation Capital invests first on behalf of Fund I, seeking as much allocation as preferred for the fund. If there is additional allocation of equity available, Nucleation Capital will then seek to syndicate that to its investor network. If a deal becomes available during a quarter in which Nucleation has already invested, Nucleation may seek to syndicate that allocation directly to its investor network.

Early stage equity tends to be the most expensive equity, so founders naturally want to limit the amount that they issue. Some deals generate more investor interest than what the founders want to raise. Such “over-subscribed” deals rarely allow syndication. Some founders decline to syndicate because of the nature of their confidential information. Other times, a round is closing too quickly to permit the formation of a syndicate. Occasionally, the Nucleation team does not have the bandwidth to prepare the syndicate, which takes time.

“Carry” is short for “carried interest” which is a share of the deal’s net profits. Carry for most syndicated deals is 20%. Carry is paid when the deal returns proceeds in excess of the amount invested by the LPs. LPs always get their principal repaid first, then the excess is split between the LPs, who get 80% or more and the sponsor, which gets 20% or less. This is a “success fee” paid to the sponsor as reward for its selection of good ventures and for managing the SPV.

Nucleation has not managed to syndicate as many deals lately as it could a few years ago, as competition for top advanced nuclear ventures has increased and excess allocations are rarer. We aspire to offer between 2 and 4 syndicated deals per year but closed only one syndicated deal in the last year. In contrast, Fund I made 5 investments last year. To obtain access to more deal flow, we recommend you consider participation in Fund I. A reduced minimum level for Syndicate members is available.

Yes, foreign investors may participate in syndicated opportunities. In rare instances, such as for Danish residents, local rules prevent them from investing in a US syndicate for a Danish venture. Foreign investors will need to be able to meet the US SEC accreditation requirements.

Syndications have been around a long time but technology has only recently made widespread participation possible for accredited investors by reducing the minimum check size required. Now, nearly all accredited investors can afford to participate in a range of private equity opportunities. Nucleation Capital is leveraging state-of-the-art technology to make advanced nuclear and deep decarbonization deals both accessible and affordable to more investors.