Deciding whether to raise a fund or start with special purpose vehicles (SPVs) depends on several factors, such as your investment strategy, the size of the investments you plan to make, your investor network, and your ability to manage and operate a fund. Here are some pros and cons of each option to help you make a decision:
Starting with SPVs:
Pros:
- More flexible, easier and cheaper to set up than a fund
- Can be set up quickly to take advantage of specific investment opportunities
- Lower regulatory and compliance requirements than a fund
- Ability to raise capital from a smaller network of investors
Cons:
- Limited ability to pool capital and scale investments
- No long-term fund management fees to support ongoing operations
- Can be time-consuming to set up each SPV and manage separately
- May not be as attractive to institutional investors who might prefer to invest in funds
Raising a Fund:
Pros:
- Ability to pool capital from multiple investors and scale investments
- Potential for long-term fund management fees to support ongoing operations
- More attractive to large institutional investors who prefer to invest in funds
- Greater ability to manage and diversify a portfolio of investments
Cons:
- Higher regulatory and compliance requirements than SPVs
- Longer and more complex setup process than SPVs
- Typically requires a larger investor network to raise enough capital to support ongoing operations
- Requires ongoing fund management and reporting to investors
Which Option Suits Your Investment Strategy?
In general, SPVs are a good option if you are just starting out and want to test your investment strategy, or if you plan to make smaller investments and prefer to work with a smaller group of investors. However, if you plan to make larger investments and want to scale your operations over time, raising a fund may be a better option.
Ultimately, the decision of whether to raise a fund or start with SPVs depends on your individual circumstances and investment strategy. It’s important to carefully evaluate your options and consult with legal and financial experts before making a decision.
Ready to set up a SPV?
At Auptimate, we make it easy to design, launch and operate market-leading SPVs online for a fixed, low price. If you’re ready to start your next SPV, hit the “Launch” button at the top of this page. Or get in touch with us at info@auptimate.com and one of our experts will be more than happy to help.
