Club deals pool capital from a small number of investors, often four to twelve, who collectively back a single transaction. They are common among EO, YPO, and family-office peer groups.
Why they exist
Larger checks unlock better deal terms (lower fees, board seats, allocation priority). Few individuals want to write the whole check.
How they form
Usually around one or two organizing members who source the deal, lead diligence, and negotiate terms with the sponsor. The rest contribute capital and review work.
Governance
A simple LLC or LP wraps the investor group. Voting rights, expense sharing, and exit provisions are defined in the operating agreement.
Common pitfalls
Free riding on one organizer's diligence, unequal time commitments, and disputes over follow-on capital. Clear written agreements at the start prevent most of these.
If you are evaluating a transaction in this space and want a candid second look, Solender Capital is happy to compare notes. Reach out through our contact page and share what you are working on.