How To Vet A New Sponsor

[Justin Moy]

Experience is a big part of vetting for sponsors in syndications or other passive investments, but I don’t think it’s a deal killer if the sponsor is new. Here’s the top 3 pieces of advice on vetting a new sponsor:

1. Who is on the team?

It's unlikely that a brand new sponsor will work on a deal on their own. It would also be extremely difficult for someone with no experience to qualify for a commercial loan. So, the first thing you want to know is who has experience on the team and what their role is.

It's common to see less experienced syndicators or fund operators partner with more seasoned teams or individuals on deals, with everybody bringing a different piece of value to that property.

If the sponsor you're vetting is partnering with another company or operator, you need to know who underwrote the asset and who is managing the asset. Once you understand who handled the underwriting and who will be managing the asset, you should dive into that group's experience, as they’ll be the ‘main’ operator in the deal.

2. If they have a mentor on the deal, what is their role exactly

If a new sponsor is heading up the deal and not raising for another sponsor group, they likely have a mentor or partner on the deal with them that holds experience. Not just to qualify for the loan, but to bolster their resume.

I’d recommend knowing exactly where that mentors role starts and stops on this deal specifically. Sometimes it’s just signing on the loan, sometimes they take a more serious position in the asset management, or sometimes it’s giving high level guidance.

You’d want to know if that operator is truly involved in the deal, or just being used as a marketing tactic.

3. How successful were they in their previous role?

Even the most seasoned people did their first deal at some point, so if they are taking charge on this as their first asset, I’d like to know how successful they were in their previous role.

High achievers tend to be high achievers anywhere they go and surround themselves with other high achievers. If the new sponsor was a high achieving worker or entrepreneur before diving into real estate, I’d feel more comfortable in their ability to solve problems, seek mentorship, have tough conversations, deal with stress, and hold themselves to a higher standard.


Experience is a key component of a successful deal, but it’s not the only one. New sponsors can absolutely hit home runs but as a passive investor you should have a full picture of their experience and how that relates to their ability to manage your investment.