Syndicates Masterclass: Value Props

SPVs offer a ton of benefits to both investors and founders.

LPs are the community of investors backing a given deal. These people back SPVs because they proved:

  • Access. Because SPVs allow individuals to pool capital, LPs can invest as low as $1k. Direct investments often have higher minimums. They get access to leads’ deals and benefit from their experience in picking and managing investments. These deals will be typically hard to access for someone who hasn’t spent considerable time building deal flow.
  • Options: LPs select funds based on the GP and their investment thesis—but they don’t have a say in the specific investments the GP makes. With an SPV, everyone knows what the investment is, meaning no LP has to be part of an investment they’re not interested in. For LPs, investing alongside a GP on a deal-by-deal basis allows them to get to know the GP and their investment philosophy in practice. It also allows LPs to pick companies they’re interested in investing in.

On the other side of the table, startups get more capital with a single cap-table entry.

SPVs offer founders:

  • Simplicity. Founders like SPVs because it allows them to accept capital from a group of investors without having to add each one individually to their cap table. Fewer investors on the cap table means less administrative work and the ability to keep sensitive information to a smaller group of people.
  • Network expansion. SPVs give more investors skin in the game. These investors come with their own network that they can leverage to help companies reach their business goals.