What is a Club Deal?

You’re probably familiar with the most famous of them all : Anthony Bourbon’s Blast Club.

The Club Deal is a recently introduced investment structure, whose number has increased considerably over the past two years. You can use them in the same way as funds. In fact, when you talk about them, it’s not uncommon to think of them as VC funds.

So, what are the differences and what are the implications for you?

Where a “classic” VC fund raises money from subscribers over a 10-year period, in amounts ranging from €15 million (for a very small fund) to several hundred millions or several billions (for the largest), a Club Deal doesn’t actually raise money.

As the name suggests, it’s a matter of bringing together investors ready to invest deal by deal, with entry tickets that can be low (€1,500 in the case of Blast Club). The Club Deal team is responsible for bringing these investors together and sourcing and analyzing future deals.

For each new investment, the Club Deal will solicit certain members of its club, whereas a fund does not solicit its subscribers for each round. 

Investment in the startup is not made on an individual basis. Instead, an SPV (Special Purpose Vehicle) is set up, and it is this vehicle that acquires a stake in the startup. In this way, the entrepreneur’s sole contact (like a fund) is the team that set up the club deal, and it is with this team that the terms of entry are negotiated.

This clearly distinguishes Club Deals from business angel networks, which generally invest in start-ups on an individual basis.

Last but not least, Club Deals are capable of investing large sums of money, generally between €0.5 and €2 million, i.e. more than business angels.

While the Club Deal operates differently from an investment fund, it also has its own advantages and disadvantages :

Advantages :

– An investment thesis that can evolve more flexibly over time than that of a fund.
– The dozens or even hundreds of investors in the SPV who invest in a start-up can make excellent ambassadors. Some Club Deals have very strong operational and strategic support for their investments.
– A different exit horizon: while funds have an average investment horizon of 5 to 7 years, Club Deals generally have more flexibility and can be more patient.

Disadvantages :

– Once the Club Deal investment team has been convinced, the club’s investors must also be persuaded to invest.
– Club Deals generally have a lower reinvestment capacity than funds that maintain a reinvestment envelope.