Choosing Between Starting a Fund and Utilizing SPVs

Building trust and getting past the initial hesitation are really the two first steps for people getting started down the path of a VC fund, syndicate or really any investment group.

I talk with a lot of folks that have thought about creating a traditional fund because they wanted to have money ready to support the startups they were really excited about. They also liked the idea of earning money through management fees, thinking it could be a way to make a living from investing. But they quickly learned that to get a fund up and running, you need a good history of making successful investments, or at least a strong reputation or a special way of investing.

There are a fair number of people that have an eye for spotting really good opportunities and get the dealflow, but don't have an established track record to showcase to their potential investors. By doing deal-by-deal investments with SPVs, you'll find it's a much easier way to start building connections in the investment world.

Using Special Purpose Vehicles (SPVs) turrns out to be a really smart move for a lot of people. It can make starting out much simpler and as a result, faster to put a deal together and raise capital.

I've found that using this type of deal structure, conversations with potential investors changed from "let's talk more next month" to "I've just sent you the money."

If you're new to the space and wondering whether to start with a fund or SPVs, it might be wise to go with SPVs. Starting a traditional fund is usually more complicated and takes longer than you'd expect. There's a lot of legal considerations and responsibilities that might surprise you.

On the flip side, SPVs have several benefits:

• They're simple to understand and explain.
• They encourage you to take action.
• Investors in SPVs feel like they have more say in each investment, which can lead to more money being put to work.
• Investors who want to help out directly with the companies they invest in like this approach.
• With SPVs, you can take a break from making deals without worrying about charging fees for doing nothing.

In the end, there's no one-size-fits-all answer for new investors. But if you're looking to try out venture investing in a more flexible and straightforward way, SPVs could be a great option. If you're looking for a great platform to use for your SPV, look no further than Syndicately