Automating SPVs
Introducing Sydecar, the frictionless deal execution platform for new venture investors
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After teasing it a few times in previous newsletters, I’m thrilled to share a bit more about Sydecar, the company I’ve been helping to build since last summer. It feels natural — necessary, maybe — to talk about Sydecar in this forum, given all of the overlap with Automatter. And given that I got the job because of writing this newsletter!
Sydecar brings a truly product-led approach to venture investing, starting with SPVs. Our platforms handles back-office operations for venture investors, automating banking, compliance, contracts, tax, and reporting. We have built product where industry veterans have built large operations teams, and focus on infrastructure where others have focused on brand. By pioneering industry standards for fund formation and allocation, we hope to do for early-stage investing what the YC Safe did for early-stage fundraising: streamline transactions and lower barriers to entry.
Sydecar was founded by two “recovered attorneys” and micro-fund managers. You can read more about their story, inspiration for Sydecar, and our recent seed funding here. If you don’t want to read the whole blog post, here’s a blurb that will resonate with Automatter readers:
Today, entrepreneurs realize the value of having former founders and operators on their cap table — individuals who have spent time in the trenches of company building and have gained tremendous expertise and empathy. All of this has led to the rise of new types of capital allocators, including operator-angels, solo capitalists, and emerging fund managers. But these new entrants to VC aren’t staffed with a personal team of lawyers, accountants, and bankers to support their deal execution. In the past, they’ve had to piece together a slew of service providers, consequently compromising on cost, speed, reliability, and compliance. They’ve frequently missed out on deals, stressed over lost wires, and waited on late tax documents as a result. We felt this pain firsthand, and that pain was our call to action.
This week, Business Insider covered our launch, with a focus on how we’re differentiating from industry vets like AngelList and Carta. If you’re not a subscriber, here’s a teaser:
The market for VC platforms is still "fairly nascent," and existing solutions don't "anticipate or react to what customers really want today, which is efficiency, a frictionless transaction, more focus on relationships and information sharing, and ultimately liquidity," Talreja said.
Sydecar wants to create a standardized process for emerging investors raising funds and investing capital, from opening bank accounts to generating agreements for signing. […] This strategy differs from traditional VC platforms, which typically rely on large operations teams to handle banking, compliance, tax, and regulatory filings.
Nik Talreja, our co-founder + CEO, has also been featured in a few of my favorite podcasts recently. On the Vitalize VC podcast:
“Over the last couple years we’ve seen Pandora’s box open capital allocation. We’re seeing that founders are some of the best investors and starting a fund is not just a pipe dream anymore. But what seems to be missing, that we’re solving for, is a unified approach to allocation — creating investment vehicles, managing flow of funds, managing reporting. The lifecycle of the SPV itself. And for us, that’s the opportunity — to be the foundational layer for where deals get done, which ultimately gives a chance to perfect how reporting happens and giving our customers a chance to focus on building relationships.”
And on the Confluence VC podcast:
“What we realized was that VC today is kind of like company fundraising prior to introduction of the YC safe. Prior to the Safe’s existence, every law firm had their own form of convertible note or preferred stock purchase agreements. Then YC said, ‘Let's do away with all this unnecessary complexity. Here's a four-page document that everybody agrees is a better way to transact.’
We want to do that for VC. And, having been users of inferior products in the past, we realized that what’s missing is standards — just like YC. The one form of SPV of the industry thinks this is acceptable with a few toggles to meet certain economic agreements that you have with your limited partners. The one form of fund that actually gets you where you want to go.
That realization of the lack of standards is really what put this thing into motion and why we've gotten so much attention. It's the trust and credibility we bring, but also the fact that we're thinking about this problem with a product lens, driven by standards.”
When I met Nik and Dave last June and they told me what they were working, the first thing I said was “I feel like I wrote this product into existence.” In the first year or so of writing Automatter, I felt like I was able to provide a tremendous amount of value to new investors — by recommending better Airtable set ups, advising on data practices, and troubleshooting Zapier errors. But over time, I started getting more and more questions that I couldn’t answer — questions about banking and KYC, about carry structuring and distribution preferences and QSBS hacks. You can’t Zap your way through those problems. And for a while, I didn’t have a good answer for people who wanted to avoid spending hours (and thousands of dollars) going back and forth on email with old school service providers. But Nik and Dave have managed to build true product over their years of experience as attorneys and as fund managers. They’ve built paths that make decision making for new investors dead simple, while giving them full transparency and confidence in those decisions. And they’ve figured out how to make deal execution possible with out spending hours going back and forth on emails, waiting days (or weeks) to open a bank account, or having to file an extension on your taxes every year.
If you’re reading this article, it means you must care about venture ops and fund admin just a bit — and I think you’ll be really excited about what we’ve built at Sydecar. If you want to chat more, email or DM me.
"Leave the boring stuff to us." Amazing! Congrats on launching. Looks like a super useful product
As a brand person, I actually really appreciate the focus on a dead simple product first. Great differentiator, and something that worked well in the micromobility industry for late comers (a differentiated product > brand).