It’s easy to understand why the syndication model has appealed to capital raisers for many years. Sponsors appreciate the ability to execute deals quickly, and investors enjoy the level of control that comes with deciding which deals they want to participate in.
But now that there’s a better option available, there’s no compelling reason to keep using traditional syndications. Building a customizable fund on Avestor can offer you the same advantages as a syndication — and a few extra benefits, too — but at a significantly lower cost.
In this article, we’ll break down exactly how much you can save by building a customizable fund instead of raising through a syndication, whether you’re an experienced syndicator or you’re preparing to do your first deal
What Makes Syndications So Expensive?
The very thing that makes syndications so attractive — the ability to fundraise on a deal-by-deal basis — also makes them expensive.
Each time you sponsor a new syndication deal, you have to complete a new blue sky filing and create a new PPM. This creates significant, unnecessary expense for the sponsor. It also can take weeks to accomplish, preventing you from hitting the ground running with your fundraising.
The separate entities associated with each syndication also make investor on-boarding and relations much more complicated than they need to be, which in turn creates more cost for the sponsor. With less LLCs, your accounting and tax costs will decrease dramatically.
The syndication model is simply not scalable, and we’ve seen it hold too many capital raisers back from reaching their full potential.
How Is Avestor different?
What if there was a way to give investors the opportunity to invest on a deal-by-deal basis, without having to create new PPMs and blue sky filings for each deal? Now, there is, thanks to Avestor’s customizable fund model.
Any fund you create on the Avestor platform is evergreen, so you can bring all your deals under one umbrella. Unlike a traditional fund, customizable funds can also hold multiple asset classes and business models. Your fund will only have one PPM and one blue sky filing, which simplifies operations significantly for both you and investors.
And best of all, once you complete the initial on-boarding and setup, you can add future deals at any time. Instead of taking weeks, you can set up a new deal in just a few minutes. Because it’s so much more cost effective to raise money through Avestor, you also have the ability to take on smaller deals that wouldn’t otherwise be profitable.
The ability to set up deals under one PPM is a compelling reason to join Avestor on its own, but it’s not the only advantage. Avestor is more than just a tech platform, and we’re able to reduce costs for our fund managers in a number of different ways.
When you join Avestor, you gain access to our vast network of resources and partners. And because we work with so many fund managers, we’re able to negotiate significant discounts with our partners. With Avestor, you can save on:
- Commercial loans
- Content writing
- Tax preparation
- Website design
- And more.
We also offer complementary bookkeeping services for our customers.
Plus, Avestor is a solution that many investors have been looking for, so you’ll likely find that you’re able to fundraise much more successfully than you had previously. Learn more about those investor benefits in this article.
How Much Can You Save by Switching to a Customizable Fund?
All of these savings add up, and in the end, the cost to launch an evergreen, customizable fund with Avestor is similar to the cost of a single syndication deal.
In fact, you can expect to save around 53% in your first year, and you’ll see continued savings each year after. You simply pay a one-time setup fee, and then Avestor takes a minuscule percentage of your annual revenue (0.5% at the most, and that percentage decreases as your revenue grows).
To see a more in-depth breakdown of the numbers and find out exactly how much you could save with Avestor, download our free Customizable Fund vs. Syndication Cost Calculator.