SPV Administration for Syndicates: What to Know Before You Start

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[Section 5] SPV Admins: Key Considerations - Highlights

Why You Shouldn’t Do It Yourself

• High complexity – Legal, tax, governance, and administration are major burdens.
  
• Cost concerns are often misplaced – The issue isn’t the SPV cost but small raises (under $100K).
  
• Solution: Grow your investor network to make SPV costs more viable.
  

SPV Administration Structure

• Typically structured as a master entity (LLC) with subordinate series entities for tax efficiency.
  
• Key components:
  
  • Governance – Subscription agreements, operating agreements, compliance.
    
  • Administration – Bank accounts, document signing, wire transfers, investor accreditation (KYC, AML).
    
  • Accounting & Tax – Ongoing entity maintenance, tax filing, and eventual closure.
    
  • End of Life – Either liquidity event (returns distribution) or dissolution.
    

Choosing an Administrator

• Avoid the cheapest option – Longevity and stability are more important.
  
• Build relationships with administrators and platforms for long-term support.
  

SPV & Syndication Platforms by Region

• US: Sydecar, Vauban (acquired by Carta), AngelList.
  
• Europe: Odin (UK), Vauban (UK), Round Table (EU, using Luxembourg vehicles).
  
• AsiaPac: Auptimate (Singapore), Aussie Angels (ANZ).
  

Syndication Use Cases

1. Deal-by-Deal Investing (Core Model)
   
   • Investors control portfolio construction & capital allocation.
     
   • SPVs are cost-efficient and align with venture’s long lifecycle.
     
2. Syndicating Into Funds (Challenging)
   
   • Different value proposition – Funds are passive, diversified, and lower return (3x in top quartile).
     
   • Carry stacking issue – Both the fund and SPV take fees, reducing net returns.
     
3. Potential Innovations
   
   • SPVs for income-generating assets (e.g., search funds, credit products).
     
   • Challenges – Requires new regulation & liquidity mechanisms for distributing periodic returns.

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