A Common SPV Path: From LP to GP

My own path to SPVs started with being an LP (limited partner, i.e., investor) in a number of early syndicates from 2017–2019. I was turned onto the space after a crypto friend told me Joey Krug—Augur founder turned Pantera Capital partner turned Founders Fund partner—was running a deal I should invest in. From that point on, I was completely hooked. I invested 50+ small checks into startups as an LP and got familiar with many of the syndicate leads at the time—there weren't many back then.

Just by watching syndicate GPs (General Partners, i.e., syndicate leads), I came to understand a few things: how to write compelling investment memos, how to better evaluate venture deals and how to hack getting LPs. What I didn't really understand was how to source, which delayed my path quite a bit. But in 2018, I interned for free at an awesome syndicate GP [early investor into brands including LMNT, PrimalKitchen, etc.], and later worked at a fund to better understand how to source properly. In 2020, I made the leap to syndicate GP.

Momentum came more or less immediately, validating that I could do this. I co-syndicated my first deal with a larger GP who had a substantial LP base, and we raised almost $500K for the Initialized led Series A deal in a few weeks. Six years later, we’re close to wiring out our 700th SPV. It has been a roller coaster, and I'll be the first to admit this business takes a lot of mental persistence given how cyclical it is. There's also a 5–10+ year lag of delayed gratification—that's how long it takes for carry to be released on some of these investments—where you're basically working banking hours for sweat equity if you do this at scale.

This path from LP to GP is common. Many of the best syndicate leads I follow today were LPs in my SPVs. One started his own syndicate focused on biotech, another on AI, another on crypto, another with a secondaries focus. Many of the managers I follow were my LPs at some point—and their trajectories have been worth watching. 

Some used the syndicate role as a launching pad to institutional funds. As mentioned, Joey went on to work at Founders Fund. Another syndicate GP went to work at Craft Ventures, another went to Menlo Ventures, another went to Quiet Capital, another went to launch a $100M solo fund, and so on. Even though syndicates get criticized, it shouldn't be for the quality of managers. While there are tourist managers, like in any industry, the quality bar is generally exceptionally high if you’ve done this at scale over some period. 

What does deserve criticism is the process. It's broken, and expectations are often misaligned—but I hate to say it, you get what you pay for. This isn’t true with all managers, but volume syndicate leads often aren't earning any meaningful income, or any at all, from fees, and they're typically running a one-person show with an admin. This is a sweat equity business with a 5–10 year payoff horizon and very minimal income in the interim. That's not an excuse for poor service—but it's context worth understanding.

I will say that what worked to build an LP base when I started doesn't really work today. I built an LP base through partnering with larger GPs who were open to sharing their LPs with us on deals we collaborated on. Today, that approach is not as effective. Given the lack of broad retail participation compared to pre-2022, there's just a lot less activity.

If I were an LP today interested in pivoting to a syndicate GP, I'd start by scouting for a few months. Here's what that looks like: find promising companies through your network, warm intro them to an established GP [with GP opt in], help with diligence and negotiate a carry split on deals that close. You're building a track record, learning the craft, and—critically—proving you can source before you have to prove you can raise. The hard part in this market is raising capital—much different than 2021. It's still very hard to get great deals, but capital raising tends to be the more exhausting part given the lack of leverage around capital raising that exists in the ecosystem right now.

The exception would be if you already have a strong network of very affluent folks looking for access to private deals, or you really see this as a 10–20+ year career for yourself and not just a stop along the road. If that's you, then just get started.

If you're looking to scout or collaborate, feel free to reach out to us at Calm Ventures & Riverside Ventures or just reply to this email with interest and start sharing deal flow with us. The path from LP to GP is well-worn for a reason—it works. Just know what you're signing up for.

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✍️ Written by Zachary and Alex