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Why SPVs are important for founders

Guest Author: Sam Loui from Sydecar
Date: 11th of July 2023

At time of writing, we've entered a market downturn.

So, the thought of finding capital may be daunting.

 

However, there are great capital opportunities for founders who look beyond raising exclusively from VC funds.

 

Founders who have built a loyal community, customers, or network can expand their pool of capital through SPVs.

 

As a founder, fundraising from your community of customers and community is a great source of capital and further aligns your network with your business and its mission.

 

However, when taking all of these checks from angel investors, it can very easily become an administrative headache and even a deterrent for investors in your future funding rounds.

 

Too many lines on your captable can leave your startup dealing with agonizing, slow processes when speed matters most.

 

This is where Special Purpose Vehicles (SPVs) come in - they help keep your cap table clean and streamline coordination with your investors for the life of your business.

 

An SPV is a company that is formed specifically for the purpose of pooling money from a group of investors to then invest in a single company (such as your startup).

 

By creating an SPV or working with a syndicate lead, you can accept investments from investors with smaller check sizes, which helps you reach a wider audience of potential investors who may not have been able to participate otherwise.

 

Additionally, using an SPV will help keep your cap table clean, which will save you time and money and stay appealing to future investors.

PLUG:

 

Sydecar's SPV enables you to easily spin up an SPV and save thousands of dollars and hours of back and forth with lawyers and accountants.

 

The platform allows you to create a deal page that shows off what makes your company unique, invite investors via easy-to-use invitation links, and manage funding options through ACH or wire. With Sydecar's SPV, there are no upfront fees, and your investors only pay when you close the SPV.

 

Find out more about Sydecar here.

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