Sydecar customers have the option to create their own, custom Master LLC, or leverage Sydecar's House Structure to establish their SPVs.
Sydecar SPVs leverage the Series LLC because of the many benefits to deal managers and investors. Under this structure, there is a single Master LLC that is registered with the state of Delaware and pays the appropriate taxes and fees on an annual basis. An unlimited number of distinct Series LLCs can be created under the Master LLC. Each Series LLC is protected from any adverse judgments against any other. This structure is particularly cost-efficient for investors who are using LLCs to invest in startups on a deal-by-deal basis using SPVs.
Ultimately, this means that you have two options as a Sydecar customer:
Create Your Own, Custom Series LLC
Forming your own LLC and Series LLCs is easy in Sydecar. We charge $5,000 to form and maintain your registered LLC for a period of 10 years. When you create a new "Series", you’ll append it to the existing LLC we’ve registered for your Sydecar business in the state of Delaware.
For example, you could register “Ambitious Ventures LLC.” After forming this entity, every LLC we create for you would be an individual Series of this entity, such as:
"Company 1, a Series of Ambitious Ventures LLC"
“Fund I, a Series of Ambitious Ventures LLC”
Use Our House Structure
If you’re cost-conscious, you could make use of Sydecar’s house structure instead, which allows you to form a Series LLC for free. Our house structure is registered as "CGF2021, LLC.”
If you opt to use our house structure, we will create a unique series for each of your deals. For example, say you’re raising your first fund: we would generally append your fund’s name and an identifier, which would look like:
"Manager Fund I, a Series of CGF2021, LLC"
“Manager Fintech Fund, a Series of CGF2021, LLC”
What should I choose?
We charge $5,000 to form and maintain your registered LLC for a period of 10 years. Many fund and deal managers choose to register their own LLC because:
- Your LLC name is visible and it is how your investments appear on company cap tables and public filings
- A high-level LLC name might be preferable for fund operators who plan on raising multiple funds
- You mitigate shared connections to other Sydecar SPVs formed and managed under our house structure.
In any case, some managers might prefer to save the $5,000. On the other hand, the value-add from registering under your LLC name might be meaningful, both to your fund’s brand and credibility.
How do I pay for my custom Master LLC?
You have the option to pay for your Master LLC entirely upfront or over a one-year period. If you select to pay upfront, you will pay a slightly reduced fee of $5,000 to Sydecar. For more flexibility, we give you the option to pay in four quarterly installments of $1,375 for a total fee of $5,500.
This payment covers the registration and management of your Master LLC for a 10-year period.
The SPV or syndicate manager is responsible for the cost of the Master LLC and will be directly invoiced by Sydecar. However, you have the option to expense this cost to your SPV investors using Sydecar’s expense feature. Since you will be using the Master LLC for all of your SPVs, you may consider expensing the cost across multiple vehicles.
Expensing Your Master LLC:
- When setting up an SPV, under SPV Terms, indicate that you will have additional expenses for this SPV.
- Any time after you have invited investors, go to the Expenses tab and click the Add SPV Expense button.
- Indicate how much of the Master LLC you'd like to expense to this SPV and upload the Master LLC invoice from Sydecar.
- If you choose to expense the Master LLC across multiple SPVs, repeat this process.