The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified

Jeremy Neilson of Assure joins Nick to discuss SPV's, Side Cars, & The Syndication Surge. In this episode, we cover:

  • Quick walkthrough of your background
  • Can you give us a brief overview of Assure?
  • What is an SPV Investment in the context of this discussion?
  • Can you walk us through the history of how sidecars and/or angel groups have handled (or mishandled) these syndication style investments in previous decades?
  • Why do you think startups and seekers of capital are increasingly raising through SPVs and targeting syndicate leaders?
  • What are the pros and cons of utilizing an SPV as an LP or individual investors?
  • What are the pros and cons of utilizing an SPV as an institutional investor or syndicate leader like myself?
  • Do the lead investors on these SPVs make money upfront -- initiation fees, mgmt fees, broker/transaction fees?
  • Some critics of the SPV model may say that the fees associated with SPVs can also create misalignments between the VC and LP. I haven't heard this critique myself but what are your thoughts on comments like these and how should the vehicle be structured to avoid misalignment?
  • With the SPV model, you're providing members with specific rights, such as redemption, voting, and pro-rata rights. Talk about thee member rights and its effect on the associated parties. From the investor's standpoint, are there any issues or risks associated with providing such rights and what's your opinion on how it should be handled?
  • What are your thoughts on sidecar investments and how should they be handled correctly? What are some challenges and in what situations do they work best?
  • Do you see fund managers that use SPVs exclusively for pro ratas? What are the advantages here?
    What are the regulatory risks for sidecar funds?
  • How big should a side car fund be and what's the appropriate minimum contribution?
  • SPVs are viewed by some VCs as passive investors (non-strategic money) and that the company should have pursued more active investors. An SPV leading the round has the potential to magnify this thinking even further. What's your opinion here and what advice would you have for those raising capital?
  • There are other platforms offering "SPV as a service"... platforms that you've powered on the back-end like AngelList and SeedInvest. Why would lead investors use you over one of the other platforms?
  • At the VC or PE fund-level, you also offer fund administration. What does that entail and how is it different than admin at the SPV-level?

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Direct download: 199_199._SPVs_Side_Cars__The_Syndication_Surge_Jeremy_Neilson.mp3
Category:general -- posted at: 12:00pm EDT