Frequently Asked Questions
You have questions, we have answers. Please contact us directly if you have any additional questions.
Is there a demo available?
Yes! Make sure to book a demo with us. During the demo, you'll get to see the platform in action and understand how it can revolutionize your investment experience.How can I get started with Syndicately?
You can get started with Syndicately by registering for an account and creating your free deal page.Who uses Syndicately as a SPV platform?
Yes, Syndicately is trusted by a variety of professional investors, including VC's, Family Offices, and Angel Investors.How can I reach more potential investors?
You can share your deal page link with your network and use the platform's tools to distribute information and updates amongst co-investors, founders, and portfolio companies.Who can see my deal page?
Your deal page is visible to anyone who has the link + registered for an account. You can share the link with your network to prospect for interest.Can I personalize my deal page to highlight my investment opportunity?
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 your target close date, SPV target value, investment type, investment minimum, investment maximum, SPV management fee, and SPV manager carry.Is it free to create a deal page?
Yes, creating a deal page on our platform is free. You only need to register for an account.What is a deal page?
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.Can a cap table be utilized for company valuation?
While a cap table furnishes insights into a company's ownership structure, it is not typically employed for company valuation purposes. Valuation is typically conducted through alternative methods, such as discounted cash flow analysis or comparable company assessment.What is the definition of “liquidation preference”?
A liquidation preference denotes the entitlement of preferred stockholders to receive a return on their investment before common stockholders in the event of a liquidation event, such as an acquisition.What does “dilution” entail in the context of a cap table?
Dilution represents the process through which the ownership percentage of existing shareholders diminishes when new shares are introduced. This occurrence often transpires when a company secures additional funding or grants stock options.Who uses cap tables?
Cap tables find their primary utility among startups and investors. Nevertheless, anyone with an interest in comprehending a company's ownership structure can find value in consulting a cap table.Why are Cap Tables important?
A cap table holds a crucial role as it enables entrepreneurs and investors to gain insight into a company's ownership framework. It offers a transparent view of each individual's ownership stake in the company and how these ownership percentages evolve over time.What Tax Filings does Syndicately prepare?
The Syndicately team collaborates 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.Can I allocate Carry with Syndicately SPVs?
Certainly, you can allocate customized carry among existing partners and external advisors directly on the Syndicately platform.Does Syndicately Support International LPs?
Yes, Syndicately supports international LPs, provided they meet the accredited investor criteria as defined by U.S. standards. In the U.S., the SEC Rule 501 of Regulation D specifies the accredited investor definition.What distinguishes the Syndicately platform for fund managers and Investors?
The Syndicately platform is favored due to its commitment to simplifying investment for Fund Managers and Investors. Its operational transparency and simplicity set it apart from other SPV platforms. The platform offers:
How can I monitor the Investment Status as committed by Investors?
- Dedicated Account Manager
- Integration of AI Solutions
- Cost-Effective Rates
- Expedited Processes
- User-Friendly Dashboards
- Real-Time Communication Updates
- Exceptional Support Services
Fund Managers of an SPV are equipped with internal dashboards that enable them to track the investment status. This includes the committed amount, investor participation, and fund transfers.What types of Investment Vehicles are available at Syndicately?
Syndicately provides services for crafting and managing Special Purpose Vehicles tailored for investing in startups. The preferred choice is the Delaware Master Series LLC due to its benefits like flexibility, minimal requirements, tax advantages, asset protection, and more. Establishing an SPV in Delaware doesn't necessitate physical presence in the state or restricting investment to Delaware alone. Forming a Master Series LLC under Delaware Divisions of Corporations grants access to the advantages offered by DLLCA (Delaware Limited Liability Company Act).How can businesses achieve KYC/AML compliance?
Businesses need to create and effectively implement AML compliance programs. These programs encompass various aspects like Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), risk assessment, AML policies, internal controls, ongoing monitoring, reporting of suspicious activities and transactions, and more.What are checks for KYC & AML?
A KYC check confirms the authenticity of a client's identity. An AML check examines customers against sanctions, PEP lists, and watch lists.What constitutes an AML policy?
An AML policy consists of internal regulations and strategies designed to thwart money laundering and the financing of terrorism.What does compliance with AML & KYC involve?
AML compliance involves adhering to AML regulations as mandated for regulated entities. KYC compliance pertains to fulfilling the requisites for customer identification and verification.Are AML and KYC equivalent?
No, AML and KYC are distinct. KYC represents just a portion of the broader AML program, making it part of the AML framework.What are AML and KYC?
AML stands for Anti-Money Laundering, which encompasses a set of measures conducted by regulated entities and financial institutions to deter financial crimes. KYC, or Know Your Customer, is the procedure of gathering customer information and validating their identity. KYC measures are included within AML practices.How will an SPV appear on another entity’s cap table?
In the event Special Purpose Vehicle (SPV) makes the decision to invest in another deal collectively, you may be wondering how the capitalization table (cap table) might look. Fortunately, it will not need to include all the different Limited Partners (LPs) who hold a stake in the SPV. The SPV functions as a single entity, it will only be listed as a single entity within your cap table.
When there is a liquidity event and the SPV decides to cash in its investment, the typical process would be the funds flowing back to the SPV and then distributed to the members involved with their share of the returns based on the proportion of their membership interests. The fund managers or the General Partner typically receives a portion of the returned capital as a fee. This percentage fee is determined at the time of setting up the SPV and is directed back to the general partner as a performance or "carry" fee.What are Special Purpose Vehicles (SPVs)
Special Purposes Vehicles are a non-operating entity established for the purpose of pooling members' capital to acquire a single asset.Does Syndicately support secondary transactions?
Yes, Syndicatley support secondary transactions. 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 to the company.Do you provide K1s for the SPV
Yes! For ten years after creation, Syndicately provides K1s for all investors involved in the SPV which is included in the fee you pay for the SPV.Is Syndicately the Owner or posses control of the SPV?
Syndicately is neither an owner nor have any active control over the SPV entity. Syndicately establishes the SPV entity of behalf of our clients. The manager profile selected during the SPV creation request process (an individual or entity) has operational control of the entity, which is also outlined in the Operating Agreement. Syndicately per our terms of service, is an authorized third party that can take actions on behalf of the manager and can support actions such as filling a certificate of good standing on behalf of the SPV entity each year.Can you use this to shop interest before the SPV entity gets established?
Yes, Syndicately's prospecting feature allows managers to create a 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.Are SPVs considered off-balance sheet entities?
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 transparencyWhy do states require business entities to have registered agents?
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 where they can be found in the state and be around during regular work 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 stuff. The point of these rules is to guarantee that your business can always be reached in a reliable way.What is an accredited investor – and do I need to be one when investing in an SPV?
An accredited investor is an individual, entity or trust that falls under one of the various qualifications outlined by the SEC under Regulation D. To invest in many types of offerings, you need to be a accredited investor, qualified purchaser or in a SPV 506(b) type offering, you can have an SPV with a limited of sophisticated investors that are non-accredited.Can you turn a regular LLC into a Series LLC?
Absolutely, in states that permit the use of Series LLCs, you can make changes to your LLC Operating Agreement to include separate series within it.What states allow the creation of series LLCs?
Currently, the states that allow the formation of series LLCs include: Alabama, Arkansas, Delaware, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, Oklahoma, Tennessee, Texas, and Utah. In addition to these, it should be noted that the District of Columbia also allows for the creation of Series LLCs.How do taxes work for series LLCs?
When it comes to taxes, the IRS treats series LLCs quite similarly to regular LLCs. This means that the people who are part of the series LLC need to pay self-employment taxes. These taxes are calculated based on the amount of money they make from the series LLC.What does customer support look like if I have questions while in the platform?
We offer direct customer service from a real person. You'll be able to work with an account manager that can answer your questions.Do you have to get a separate EIN for each part of a series LLC?
Yes, if a state sees each separate business within a series LLC as its own separate thing, then the IRS also sees it that way. This means that each of these businesses will need to have its own special EIN.Who can I contact with questions about setting up my deal?
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.Can an SPV/feeder fund be set up to invest in an institutional fund?
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 in order 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 often have 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 or retail investors to invest in that fund and share in its returns. The investors in the SPV or feeder fund become limited partners in the SPV and the institutional fund, and have no direct involvement in the management or control of the institutional fund.
However, it is important to note that 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.What type of investment vehicles does Syndicately Support?
The Syndicately platform supports Special Purpose Vehicles. We currently support primary equity, secondaries, SAFEs, convertible notes and plan to offer additional deal types in the future.What is the difference between an LLC and a series LLC?
An LLC, which stands for limited liability company, is a single entity created to provide liability protection. On the flip side, a series LLC is a bit more complex. It starts with a main or master LLC, kind of like a parent company, and then this main LLC can create several smaller ones called series LLCs. The interesting thing is that 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.Are SPVs legal?
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.How are investors verified?
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.What is the structure of the SPV entity and how is the income dispersed?
All SPVs are pass through vehicles; any income made from carried interest or management fees will be passed on to the EIN/SSN of the manager. It is ultimately up to you/your fund manager to decide how you want that income to be passed on and establish the best management practices for your situation.How do I find investors?
You'll need to bring your own investors into your deal. Different types of funds have different marketing restrictions that you will need to adhere to. Although Syndicately is not a marketing agency, we can make introductions to reputable agencies within our network that possess expertise in generating investor interest.Does the 3(c)(1) investor limit apply if I create multiple SPVs?
The investor limit that you’re mentioning is Section 3(c)(1) of the Investment Company Act of 1940, which limits the number of investors that a company can have to less than 100 before it is considered to be an “investment company” and would be subject to strict regulation by the SEC.
Creating multiple Special Purpose Vehicles (SPVs) in order to circumvent the Section 3(c)(1) investor limit, is a strategy sometimes used by companies. However, the SEC may take a close look into the situation to confirm if the SPVs are really separate entities and not just an attempt to circumvent the limit.
If the SEC determines that the SPVs are not truly separate entities, but rather an attempt to avoid regulation, it could consider them to be a single entity for regulatory purposes, and the investors limit would still apply.How does Syndicatly make money?
It depends on what you'd like to do with us. Book a demo now to learn more!Who handles setting up and managing bank accounts?
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.Can I use my own operating agreement?
Yes. We're aware you likely have drafted an operating agreement that works for your business and your investors. We can easily upload this operating agreement template into the Custom Portal of Syndicately where it can be adjusted for every SPV you may run.
Similarly, we have a standard operating agreement we've crafted that covers 95% of use cases, and is editable should you want to use ours.