Frequently asked questions

Syndicately is trusted by a variety of professional investors, including VCs, family offices, and angel investors.

The Syndicately platform is built to simplify investment for fund managers and investors. Its transparency and simplicity set it apart from other SPV platforms. The platform offers:

• Concierge client support
• Cost-effective rates
• Expedited processes
• User-friendly dashboards
• Real-time communication updates
• Exceptional support services

You can get started with Syndicately by registering for an account and creating your free deal page.

Yes. Book a demo to see the platform in action, from formation through the first distribution.

The Syndicately platform supports special purpose vehicles. We currently support:

• Convertible note
• SAFE
• Debt
• Equity
• SAFT
• An “other” option

Yes, Syndicately supports secondary transactions. A secondary stock transaction (or secondary) is when an investor buys shares in a company directly from an existing stockholder, typically a founder, employee, or existing investor. The funds paid go to the seller, not the company.

It depends on what you’d like to do with us. Book a demo to learn more.

We offer direct customer service from a real person. You’ll be able to work with our client support team to answer your questions.

Reach out to our team by requesting a demo if you’re new to Syndicately. Those already using our platform have access to our dedicated Client Ops team for any questions or feedback that comes up.

A deal page is a feature on our platform that allows investment managers to create a landing page for a deal and reach out to their network to prospect for interest from potential investors.

Yes, creating a deal page on our platform is free. You only need to register for an account.

Your deal page is visible to anyone who has the link and has registered for an account. You can share the link with your network to prospect for interest.

Yes, our platform offers you the tools to personalize your deal page so you can showcase your investment opportunity in a professional and eye-catching manner. This includes options for specifying:

• Target close date
• SPV target value
• Investment type
• Investment minimum
• Investment maximum
• SPV management fee
• SPV manager carry

Yes, Syndicately’s prospecting feature allows managers to create an SPV in a prospecting state to attract soft capital commitments before launching the SPV. This approach enables managers to gauge the level of interest from potential investors before committing to establishing the SPV entity.

By using this feature, managers can streamline the process of attracting interest and gathering commitments from investors, thus simplifying the overall SPV lifecycle.

You’ll need to bring your own investors into your deal. Different types of funds have different marketing restrictions you’ll need to follow. Although Syndicately is not a marketing agency, we can introduce you to reputable agencies in our network that have expertise in generating investor interest.

You can share your deal page link with your network and use the platform’s tools to distribute information and updates among co-investors, founders, and portfolio companies.

Fund managers of an SPV have internal dashboards that show investment status, including the committed amount, investor participation, and fund transfers.

Special purpose vehicles are non-operating entities established for the purpose of pooling members’ capital to acquire a single asset.

Yes, SPVs are legal entities that are recognized under various jurisdictions’ laws. They must adhere to legal requirements, including proper formation, registration, and compliance with regulations.

In many cases, SPVs are treated as off-balance sheet entities. This means that their assets and liabilities are not consolidated with the financial statements of the parent company. However, accounting standards and regulations may impose certain disclosure requirements to ensure transparency.

Yes, it is possible to set up a special purpose vehicle (SPV) or feeder fund to invest in an institutional fund. An SPV or feeder fund is a separate legal entity that is typically used to pool capital from multiple investors to invest in a specific asset or set of assets, such as an institutional fund.

An institutional fund is a type of investment fund that is typically targeted at large institutional investors such as pension funds, endowments, and other large financial institutions. An institutional fund is usually open to investors who meet certain minimum investment requirements, and it often has lower fees and expenses than other types of investment funds.

When an SPV or feeder fund is set up to invest in an institutional fund, it acts as a vehicle for individual investors to invest in that fund and share in its returns. The investors hold interests in the SPV or feeder fund, which invests in the institutional fund as a limited partner. The investors have no direct involvement in the management or control of the institutional fund.

However, the institutional fund may have certain requirements for its investors, such as minimum investment amounts and/or accreditation requirements, and those requirements must be met by the SPV or feeder fund investors.

The investor limit in question is Section 3(c)(1) of the Investment Company Act of 1940, which limits a company to no more than 100 beneficial owners (250 for a qualifying venture capital fund) before it is considered an “investment company” and becomes subject to strict regulation by the SEC.

Creating multiple special purpose vehicles (SPVs) to circumvent the Section 3(c)(1) investor limit is a strategy sometimes used by companies. However, the SEC may look closely at the situation to confirm whether the SPVs are really separate entities or an attempt to circumvent the limit.

If the SEC determines the SPVs are not truly separate entities, it could treat them as a single entity for regulatory purposes, and the investor limit would still apply.

Syndicately is not an owner of the SPV entity and has no active control over it. Syndicately establishes the SPV entity on behalf of our clients.

The manager profile selected during the SPV creation request process, whether an individual or entity, has operational control of the entity, which is also outlined in the operating agreement. Per our terms of service, Syndicately is an authorized third party that can take actions on behalf of the manager, including the yearly state filings that keep the SPV entity in good standing.

Yes. We’re aware you have likely drafted an operating agreement that works for your business and your investors.

We also have a standard operating agreement we’ve crafted that covers 95% of use cases and is editable if you want to use ours.

Syndicately establishes a unique bank account for each SPV, your investors, and your target investment, through our system and fintech partner. Each individual person or group owns their own account entirely.

States require registered agents because of something called due process. This means that if someone wants to take your business to court, they have to let your business know properly first.

A registered agent is like a messenger for your business. They need to have an address in the state where they can be found and be available during regular business hours. This makes sure that if someone is trying to sue your business, they can easily find you. These rules also stop big companies from using their size to avoid facing legal problems.

The registered agent is the main contact between your business and the state, especially for legal matters. The point of these rules is to guarantee that your business can always be reached in a reliable way.

An LLC, which stands for limited liability company, is a single entity created to provide liability protection. By contrast, a series LLC is a bit more complex. It starts with a main or master LLC, similar to a parent company, and then this main LLC can create several smaller ones called series LLCs.

These smaller ones are shielded from the legal and financial troubles of both the other series LLCs and the main one. It’s like they have their own protective bubble within the larger structure.

Yes. In states that permit series LLCs, you can amend your LLC operating agreement to create separate series within it.

Some states also require a filing. In Delaware, for example, the certificate of formation must give notice of the limitation on liabilities between series before that protection applies.

The states that allow the formation of series LLCs include Alabama, Arkansas, Delaware, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, Ohio, Oklahoma, Tennessee, Texas, Utah, Virginia, and Wyoming, along with the District of Columbia.

More states have added series LLC laws in recent years, so check your state’s current statute before you form one.

An accredited investor is an individual, entity, or trust that falls under one of the qualifications the SEC outlines under Regulation D. To invest in many types of offerings, you need to be an accredited investor or a qualified purchaser. Under a 506(b) offering, an SPV can also include a limited number of sophisticated investors who are not accredited.

Yes, Syndicately supports international LPs, provided they meet the accredited investor criteria as defined by U.S. standards. In the U.S., SEC Rule 501 of Regulation D specifies the accredited investor definition.

We provide KYC (Know Your Customer) and AML (Anti-Money Laundering) verification processes and, when necessary, assist investors with different ways to confirm that they meet the requirements to be considered accredited and be within compliance. This can include showing that they earn enough money each year, have a high enough net worth, or hold licenses like Series 7, 65, or 82. Investors can share proof of their accredited status, ask a certified public accountant (CPA) to confirm on their behalf, or enter their FINRA license number directly.

AML compliance means following the AML regulations that apply to regulated entities. KYC compliance means identifying and verifying customers.

AML stands for Anti-Money Laundering: the measures regulated entities and financial institutions use to prevent financial crime. KYC, or Know Your Customer, is the process of collecting and verifying customer information, and it is part of AML compliance.

No, AML and KYC are distinct. KYC represents just a portion of the broader AML program, making it part of the AML framework.

A KYC check confirms the authenticity of a client’s identity. An AML check examines customers against sanctions, PEP lists, and watch lists.

An AML policy consists of internal rules and procedures designed to prevent money laundering and the financing of terrorism.

Businesses need to create and follow an AML compliance program. This includes:

• Customer Due Diligence (CDD)
• Enhanced Due Diligence (EDD)
• Risk assessment
• AML policies
• Internal controls
• Ongoing monitoring
• Reporting of suspicious activity

The Syndicately team works with a third-party service provider to prepare the fund’s tax return (Form 1065) along with the accompanying Schedule K-1s issued to the LPs of the deal.

Yes. For ten years after creation, Syndicately provides K-1s for all investors involved in the SPV, and this is included in the fee you pay for the SPV.

SPVs formed as LLCs are generally pass-through vehicles for tax purposes; any income made from carried interest or management fees is passed on to the EIN/SSN of the manager. It is ultimately up to you or your fund manager to decide how that income is passed on and to establish the best management practices for your situation.

When it comes to taxes, the IRS treats series LLCs much like regular LLCs.

Members who actively work in the business may owe self-employment tax on their share of its ordinary business income. Capital gains are not subject to self-employment tax, and investors who do not take part in running the business generally do not owe it on their share.

Generally, yes. Under IRS proposed regulations, which are not final, each series of a series LLC is treated as its own entity for federal tax purposes, whether or not state law treats it that way.

A series treated as its own entity generally needs its own EIN.

Yes, you can allocate customized carry among existing partners and external advisors directly on the Syndicately platform.

A cap table matters because it shows entrepreneurs and investors a company’s ownership structure: each person’s stake, and how those stakes change over time.

Cap tables are used mainly by startups and investors, but anyone who wants to understand a company’s ownership structure can benefit from consulting one.

While a cap table furnishes insights into a company’s ownership structure, it is not typically employed for company valuation. Valuation is typically conducted through alternative methods, such as discounted cash flow analysis or comparable company assessment.

Dilution is the reduction in existing shareholders’ ownership percentage when new shares are issued. This usually happens when a company raises additional funding or grants stock options.

A liquidation preference is the right of preferred stockholders to be paid back before common stockholders in a liquidation event, such as an acquisition.

When a special purpose vehicle (SPV) decides to invest in another deal collectively, you may wonder how the capitalization table (cap table) will look. It will not need to list every limited partner (LP) who holds a stake in the SPV. The SPV functions as a single entity, so it is only listed as a single entity on your cap table.

When there is a liquidity event and the SPV cashes in its investment, the funds typically flow back to the SPV and are then distributed to the members based on their membership interests. The fund manager or general partner typically receives a share of the profits. This percentage is set when the SPV is formed and is paid to the general partner as a performance fee, known as carried interest or “carry.”