Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

If you're new to startup investing, the terminology gets confusing fast. Someone mentions joining an angel group, another person talks about backing a syndicate, and a third suggests becoming an LP in a VC fund. They all sound like ways to invest in startups, but the structures are completely different.

The choice matters because each structure comes with different economics, time commitments, and levels of involvement. Picking the wrong one means you might end up with more work than you wanted, worse economics than you expected, or less learning than you hoped for.

Let's break down exactly how these structures differ and what that means for you as an investor.

Angel Investing Groups: Community-First Investing

An angel group is a community of individual investors who evaluate deals together but invest their own capital. Angel Squad operates this way: members attend pitch events where founders present and Hustle Fund GPs provide their evaluation framework. After seeing the pitch, each member decides independently whether to invest and how much.

The economics are straightforward. You own shares directly (or through an SPV), pay platform fees, but no management fee eating your capital annually. The time commitment varies based on how active you want to be. The learning curve is steepest because you're making your own decisions, but that's where the most learning happens.

Syndicates: Deal-by-Deal Flexibility

A syndicate is led by an experienced investor who sources deals and invites others to participate on a deal-by-deal basis. You're not committing to a multi-year fund—you get access to specific opportunities the lead negotiated and vetted.

The economics include 15-20% carry to the syndicate lead plus SPV fees. The time commitment is minimal—you review deal memos and decide whether to invest. The learning is limited because you're relying on the lead's evaluation rather than developing your own judgment.

VC Funds: Professional Management, Long-Term Commitment

A VC fund pools capital from limited partners (LPs) into a single vehicle that the general partners (GPs) manage over a 10-year lifespan. When you commit $100,000 to a fund, you're agreeing to deploy that capital over approximately three years through capital calls as the GPs find companies to invest in.

The economics follow the standard "2 and 20" model: 2% annual management fee and 20% carry on profits. On a $10 million fund, that 2% fee means $200,000 per year for 10 years, or $2 million total. This covers the GPs' salaries, office expenses, legal costs, and administrative overhead. The 20% carry only kicks in after the fund returns all capital to LPs.

The time commitment for LPs is essentially zero for the investing activity. The GPs make all investment decisions. You'll receive quarterly updates and annual K-1 tax forms, but you're not evaluating deals or attending pitch events. This is passive investing in early-stage startups.

The learning is limited because you're not involved in the decision-making process. However, if you're an LP in a fund like Hustle Fund, you do get access to their LP community and can build relationships with other LPs who might be operators or investors themselves.

Hybrid Models: The Best of Multiple Worlds

Angel Squad represents a hybrid model combining elements of angel groups and fund investing. Members invest through SPVs similar to syndicates but maintain community education and collective evaluation of angel groups. They also invest alongside Hustle Fund at the same terms.

This offers more flexibility than committing to a fund (you choose which deals) while providing more support than solo investing (you learn from experienced investors). The economics are better than typical syndicates because there's no syndicate lead carry.

Building Your Investing Strategy

Most sophisticated investors eventually use all three structures. You might join Angel Squad to learn and invest in 10-15 companies yearly, back 2-3 syndicates in sectors where you want exposure but lack expertise, and commit to 1-2 VC funds for passive portfolio breadth.

But this requires enough capital to make all three worthwhile. Most people start with just one structure. An angel group like Angel Squad provides the best foundation—you'll learn the most, build relationships, and develop judgment you need to eventually evaluate syndicates and funds.

The startup investing ecosystem has room for all three structures serving different needs at different stages. The key is understanding which aligns with your goals, capital, time commitment, and desired learning curve right now.