Key Criteria for Vetting
Emerging Sponsors

While the potential rewards are compelling, evaluating emerging sponsors to mitigate risk is critical. Here are the several criteria to consider:

Audited or Transparent Financials: An emerging sponsor may not have audited financials but their financial statements should demonstrate financial health and operational transparency.

• What to Look For: Clear documentation of revenues, expenses, and capital management practices. Financial stability is a must for any sponsor entering the retail channel.
   

Track Record of Raising Capital: Even if a sponsor is new, their leadership team may have prior experience in successfully raising and managing capital.

• What to Look For: A history of raising capital for similar projects or a leadership team with verifiable expertise in capital markets. 
   

Strong Distribution Partners: Emerging sponsors need robust relationships that national accounts professionals and wholesalers can provide to gain traction in the retail channel.

• What to Look For: Evidence of established distribution partnerships and a strategic plan for scaling their reach through broker-dealers, financial advisors, and RIAs. 
   

The Team They’ve Assembled: The sponsor’s team is one of the most critical indicators of their potential for success.

• What to Look For: A team with diverse expertise, including experience in asset management, acquisitions, compliance, and investor relations. Leadership with a mix of industry veterans and fresh talent is often a good sign. 
   

Third-Party Due Diligence Reports: Reputable sponsors invest in third-party due diligence reports to build trust with broker-dealers and advisors.

• What to Look For: Comprehensive reports from reputable due diligence firms that assess the sponsor’s health, product structure, operational practices, and overall credibility. 
   

Clear Value Proposition: Emerging sponsors must articulate what differentiates them from larger players.

• What to Look For: A compelling value proposition highlighting unique market opportunities, innovative strategies, or differentiated offerings.
   

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This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. SGS does not provide investment recommendations or advice. All investment decisions should be made based on your judgment, a thorough review of investment documents, and in consultation with a qualified financial advisor.