Seedblink's equity management platform offers two types of financing rounds: direct rounds and syndicate rounds. This guide will explain the key differences between these two approaches, their implications for founders and investors, and provide examples to illustrate each point.

What it means: In a direct round, each investor appears as a separate entry in the company's cap table.

Example: If a company raises funds from 10 investors in a direct round, their cap table will have 10 new lines, one for each investor.

What it means: In a syndicate round, all investors are represented by a single line in the cap table, managed by Seedblink's nominee.

Example: If a company raises funds from 100 investors in a syndicate round, their cap table will only have one new line, representing all 100 investors collectively.

What it means: The company must manage individual contracts with each investor.

Example: For a round with 20 investors, the founder would need to prepare, send, receive, and store 20 separate investment contracts.

What it means: Investors sign contracts with Seedblink's nominee, not directly with the company. The company only signs contracts with Seedblink at the beginning and end of the round.

Example: For a round with 20 investors, the founder would only need to manage two contracts with Seedblink, regardless of the number of investors involved.

What it means: Investors send money directly to the company's bank account.

Example: If an investor commits $50,000, they would transfer this amount directly to the company's designated bank account.

What it means: Investors send money to SeedBlink's nominee, who acts as an intermediary. The nominee then forwards the total amount to the company.

Example: If 10 investors each commit $50,000, they would each send their funds to SeedBlink's nominee. The nominee would then transfer the total $500,000 to the company in a single transaction.

What it means: The founder must confirm the receipt of payments for each individual investor.

Example: In a round with 15 investors, the founder would need to monitor their bank account and confirm 15 separate incoming transactions.

What it means: The founder only needs to confirm one payment from SeedBlink's nominee, representing all investors' contributions.

Example: In a round with 15 investors, the founder would only need to confirm one incoming transaction from SeedBlink's nominee.

What it means: The company has a direct relationship with each investor.

Example: For updates, voting, or any other investor-related activities, the company would need to communicate directly with each investor.

What it means: The relationship between the company and investors is mediated by SeedBlink's nominee.

Example: For investor updates or voting, the company would communicate with SeedBlink's nominee, who would then manage the interaction with all investors in the syndicate.

What it means: Higher administrative burden for the company, especially as the number of investors increases.

Example: Managing documentation, payments, and communications for 50 individual investors can be time-consuming and complex.

What it means: Reduced administrative burden, as most investor-related tasks are handled by SeedBlink's nominee.

Example: Even with 50 investors, the company's administrative tasks remain largely the same as if they had only one investor (SeedBlink's nominee).

Choosing between a direct round and a syndicate round depends on various factors, including the number of investors, the company's administrative capacity, and the desired level of direct investor engagement. Syndicate rounds, managed through SeedBlink's nominee, offer simplicity and reduced administrative burden, especially for larger numbers of investors. Direct rounds, on the other hand, provide more immediate relationships with individual investors but require more management from the company.