How I Raised It - The podcast where we interview startup founders who raised capital. · Foundersuite.com - software for raising capital

Ep. 306 How I Raised It with Nik Talreja of Sydecar.io

·35 min·2 clips

SPVs let managers trial a thesis deal by deal before asking LPs for a committed fund.

1. How I Raised It talks with Nick Talreja of Sidecar about SPVs, fund formation, and venture-backed capital raising. 2. Nick Talreja is Sidecar’s founder, and Nathan Beckert hosts the show from How I Raised It and asks the fundraising questions. 3. The episode asks what an SPV does, why a manager would use one, and how Sidecar automates the legal and operational work. 4. Nick says Sidecar started about four and a half years ago to remove pain points around the first SPV, first fund, bank accounts, tax advisors, and fund accountants. 5. He says his earlier career ran through New York City capital markets, Cooley in Palo Alto, and then his own law firm representing founders and VCs. 6. Nick explains that an SPV is a Special Purpose Vehicle that collects capital from a group of individuals into one entity that invests together. 7. He says Sidecar serves venture capitalists who use SPVs to buy private company shares and sit on a company cap table as one line item. 8. He adds that Sidecar forms these entities as Delaware series LLCs, where each series is treated like a separate company under the law. 9. Nick says SPVs help when an angel syndicate or emerging manager wants to avoid asking a founder to take 30 or 40 individual checks. 10. He says the vehicle also lets the deal originator attach carried interest and move capital into the company with less logistics. 11. Nick says SPVs are used to build credibility for a future venture fund by trialing a thesis deal by deal with LPs. 12. He says some managers start by working at a larger fund, while others start by making direct angel-style investments and proving they can find winners. 13. Nick gives an emerging-manager SPV range of roughly 150K to 300K, and says hot secondary deals can sometimes gather around 1 million dollars of interest. 14. He says minimum check sizes vary, but many managers wish they were 25K or 50K so a 200K deal could be filled with about 10 investors. 15. Nick walks through 20% carry and says a 100K deal returning 200K would send the first 100K back to LPs and split the remaining 100K 20K to the GP and 80K to LPs. 16. He says carry can be negotiated, even on a per-LP basis, and gives the example of charging friends from high school 5% or 10% instead of 20%. 17. Nick says founders care about closing dates and that SPV managers can become the hold-up if a wire misses the deadline. 18. He describes Sidecar as fast-moving, saying it can open an SPV the same day and has seen deals close from start to launch in 24 to 48 hours. 19. Listeners who build SPVs, run emerging-manager funds, or close venture deals under time pressure should find this useful. 20. Listeners who want market theory without operational detail may skip it.

Listen to the show on

Apple Podcasts Spotify

Play clips from this episode More from How I Raised It - The podcast where we interview startup founders who raised capital.