Sydecar’s Nik Talreja
By Alan Soclof
Sydecar’s Nik Talreja
Pictured: Nik Talreja
Earlier this week, I caught up with Nik Talreja, Co-founder and CEO of Sydecar. Sydecar helps emerging VCs start and run SPVs, handling all back office operations including subscription docs, banking, compliance, tax, and more.
In the conversation below, Nik and I discuss the future of VC, the need for liquidity in the system, and so much more. Enjoy! (This interview is edited for length and clarity.)
Alan Soclof (AS): Hey Nik! Great to connect with you. Can you start off by telling me about Sydecar?
Nik Talreja: Sydecar, in a nutshell, is an extremely easy onramp to becoming a venture investor. If you are new to venture and want to invest in a friend’s company that you think is super exciting, we give you the easiest path to make that happen. We are pioneering a standardized approach to creating investment vehicles, which makes it easier for new investors to get started even if they don’t have a personal team of lawyers and accountants.
Our goal is to grow with you. We want to walk you through launching your first deal, and then help you build a track record, build a portfolio, tell a story, raise a fund. While you focus on that, we’ll take care of all of the nuances and make sure your investors are taken care of.
AS: What do you think can make Sydecar a unique platform versus some of the other fundraising platforms out there?
NT: To start with, we’ve focused on building a product where others have built large operations teams. We’re not a marketplace; we’re the picks and shovels. We want to build tools that allow new and aspiring investors to highlight what is special about them and their access to deals, while also maintaining privacy in their relationships with their LPs.
We’re also pioneering standards for the venture industry, not just because it creates a frictionless experience, but because it creates more opportunities for liquidity that doesn’t currently exist in private markets. That’s our vision for the future.
AS: That is very interesting. Are you able to share some more color on that?
NT: So venture is a private asset, which means that there isn’t an open exchange where you can sell your shares. There are various reasons for this — we actually just published an article on this topic that talks about the challenges and opportunities around secondary transactions. Creating an efficient secondary market in venture is challenging because of the lack of information sharing, confidentiality issues, securities laws, transfer restrictions and more.
But in order to get more people involved in private investing, we have to create more opportunities for liquidity. Most people don’t want to or can’t have their investments locked up for 5 or 10 years. A lot of the challenges around creating liquidity can be solved if transactions occur within an investment vehicle rather than directly on a company’s cap table.
AS: Are there any companies trying to create something like this?
NT: Carta is working on a marketplace called CartaX, it’s a good fit for larger companies that are ready to navigate all of the hurdles that I mentioned above in order to provide liquidity opportunities for early employees.
But in early stage companies, there is almost no opportunity for liquidity unless an investor goes to the board, gets their approval, and pays the price to execute a secondary transaction. An alternative to that might be that the exchange happens not on the captable but in the investment vehicle itself. That is what we are building toward.
But to make that reality happen, investment vehicles have to be standardized. Otherwise, how do you make an exchange happen? Today, every single law firm or fund admin has a different set of SPV documents, and different structures, which means that you’re comparing apples to oranges. Our goal is to standardize the atomic unit of venture (which is the SPV) and eventually have a pool of vehicles that investors can trade in and out at the SPV level.
AS: I listened to a previous interview you did and you mentioned that you have investors running $100M deals that are entrusting you to run their SPVs. Why do you think they have that confidence in you?
NT: Frictionless, efficiency, and speed is something that everyone wants. We allow our customers to turn around a deal in 24 hours, and they care more about that than about negotiating every last word of a contract. Another part of what makes us special is that we have our customers’ backs. That trust is based upon the fact that we’ve had careers in the legal sphere, in the financial sphere, as fund accountants. We’re an experienced team, and when we try to solve a problem, we don’t immediately look for a shortcut. I think in the product we’ve built, and in the stories we tell, that credibility and trust comes through.
AS: Thanks so much for the time Nik!
NT: My pleasure. Talk soon.
- Liquidity. Liquidity. Liquidity. If you talk to any angel or early stage investor, one of their top frustrations with early stage investing is the lack of liquidity. We all know how hard it is picking a winner in early stage investing in the first place. Even when you are successful, the process can still be frustrating as it can take years and years to see any cash or liquidity from the investment. There will be a serious disrupter, maybe even several, that will make liquidity much easier to come by in early stage investing, and Sydecar’s emphasis on standardization makes me think that Sydecar will be one of them.
- Making it happen. What Nik shared with me is not just Sydecar’s vision and dream; it’s what they’re already doing. To date, the company has supported thousands of investors close over $350M in investments/deals. Additionally, the company has established themselves as a leader for the next gen VC, as solo capitalist Nik Milanovic launched his first $10M fund on Sydecar.
- Experience. Experience. Experience. Last week, I broke down how most successful founders are in their 40s. The experiences, relationships, and lessons gained during their careers are so often why this is the case – and Nik Talreja is no different. Nik has years and years of professional experience in various disciplines including law and banking, and as a venture investor. There is no doubt in my mind that his experiences have played a critical role in the success of Sydecar.
QUOTE OF THE DAY
“If everyone thinks you are right, you are too late.”
-Paul Hawken, Author & Entrepreneur
What They Do: Enable homeowners to access home equity
Amount Raised: $7M Series A
Lead Investors: LENX
The Rundown: HomePace enables homeowners to access the equity in their home by receiving up to $250K in cash in exchange for sharing a portion of gains or losses in the home’s value over time.
HomePace has a powerful management team led by CEO Joe Ciancalo, a former Director at Blackrock, and COO Megan Graff, former VP of Derivative Trading at Goldman Sachs.
HomePace is one to watch.
What They Do: On-demand delivery management platform
Amount Raised: $3M seed round
Lead Investors: Moonshots Capital
The Rundown: Cartwheel is an on-demand delivery management platform for restaurants, retailers, couriers, and more.
The company has tripled its number of customers in the past year and also now serves alcohol and cannabis companies. Some of Carthwheel’s current clients include Portillo’s, PF Chang’s, Charley’s Philly Steaks, and many more.
What They Do: Modern provider of Donor Advised Funds
Amount Raised: $2.2M seed round
Lead Investors: N/A
The Rundown: Donor Advised Funds (DAF) are tax deductible charitable accounts that are becoming increasingly popular. Charityvest has facilitated over $50M in charitable donations from thousands of donors.
Along with the seed round, Charityvest announced the launch of robo-advised, low fee ETF investment capabilities featuring ETFs from Vanguard and Blockrock. Fees on the Charityvest platform are 50% lower than other leading DAF providers.