Starting a Fund or Special Purpose Vehicle (SPV) to Pool Investor (LP) Money

[Anthony Brown]

Hi.  I posted this question as a message to some of the BP experts on Funds but I thought it would be better to post openly to get more responses and hopefully benefit others that want to do the same or similar.

We have aspirations of growth into bigger opportunities.  For some specific deals, a fund or SPV might be a better solution than a syndication.  I have no experience with either funds or SPVs but am eager to learn how these financial vehicles can help expand our ability to get into larger projects.

For our purposes we would likely want to set up a fund or SPV that can 1) provide debt in the form of fixed rate loans or 2) provide equity on the LP side for real estate investing projects.

There are a couple of caveats. In addition to having US based investors investing in US based projects, we have the need to allow foreign investors to invest in US based projects and US based investors to invest in foreign (EU mainly) based projects. We are ok with managing separate efforts through separate funds or SPVs.

But, as I read more about funds, I have the feeling funds can be complicated and expensive. I'm now thinking that a Special Purpose Vehicle would be much more favorable especially for smaller (<$2MM) pools of money.

I envision 2 options.

The first option would be for equity and the fund or SPV having the shares/percentages reflect the amount invested into the LP side of a project.

The next option would be for debt where the fund or SPV members gain a fixed return based on an agreed upon interest rate for money lent out to the project(s) plus a bonus payment that would come from project performance and allocated based on the amount invested.

Are there any online platforms that can be recommended to set up and manage these types of funds or SPVs?

I welcome any feedback on using either funds or SPVs to accomplish the 2 scenarios above and platforms to manage the fund or SPV.