Syndication vs. SPV: Which Model Works Best for Raising Capital?

Question

For those of you raising capital, how are you structuring your deals? Traditional syndications and SPVs (Special Purpose Vehicles) both have their advantages, but the right choice depends on the deal structure, investor preferences, and project goals.

• 1. Syndications offer long-term equity plays but come with SEC regulations and management complexity.
• 2. SPVs provide flexibility for one-off deals and let you pool investors efficiently without a full-blown fund.

1. Syndications offer long-term equity plays but come with SEC regulations and management complexity.

2. SPVs provide flexibility for one-off deals and let you pool investors efficiently without a full-blown fund.

Are you seeing more success with one over the other? What challenges have you faced when structuring these deals? Would love to hear what’s working for everyone in today’s market!

Evan Polaski · Answer

@Robert Ellis, I guess I am confused here.

Syndication is the pooling of money.  You can syndicate an SPV, you can syndicate a Fund, you can syndicate loans.  So not really sure what you are trying to compare here.

Generally, in today's market, and the typical investor base that is common amongst the "biggerpockets syndicators": SPV, one-off deals, direct deal offerings are more palatable than blind pool fund investments.  I have also spoken with some pseudo-placement agents that mention their clients (typically $10+mm minimum investment) are focused on SPVs.

And in my nearly 20 years in the space, it is almost never heard of that someone starts a blind-pool discretionary fund investment vehicle without having done, I'd say, at least a dozen SPV syndications (or the various names one uses for SPVs).  The SPVs prove the investment thesis to then convince investors that a blind fund is viable.

Nicholas Bourque · Answer

Syndications and special purpose vehicles (SPV) are one-in the same. Both are meant to pool money together to invest into a singular project.

Syndication is more of a fancy term that goes around for real estate investing. You don’t hear about a syndication for normal private equity business investing, which could use a SPV structure to invest into one company.