What Is a Sponsor?
A sponsor can refer to a range of individuals or entities that support the goals and objectives of some other individual or organization. Sponsors, for instance, invest in private companies, create demand for publicly traded securities, underwrite mutual fund shares for public offerings, issue exchange-traded funds (ETFs), or offer platforms for benefits, and so on. Sponsors may also lend their name and reputation to influence the adoption of a movement, platform, or brand for benefits.
Key Takeaways
- Sponsors are corporate entities that provide support within the financial services industry.
- This support can include providing underwriting for a stock, mutual fund, or exchange-traded fund offering.
- Another type of sponsor is an employer that provides benefits for its employees. These plan sponsors can act as fiduciaries and do the legal and administrative work necessary to provide plans to participants.
Understanding Sponsors
A sponsor can provide a wide range of services and support within the financial industry.
For example, startup companies are commonly sponsored through investors known as angel investors. Startups will then try to build a diverse group of investors who can help advise the company and help it grow in a way that includes individuals, venture capital (VC) firms, private equity (PE) firms, and corporations.
A sponsor may also be considered the lead arranger, or underwriter, in a funding round deal. For example, in October 2017, Digital Asset Holdings LLC raised $40 million in a Series B funding round. The funding round was led by Jefferson River Capital LLC as the lead sponsor.
Sponsoring IPOs
When a company chooses to go public it also engages the support of a sponsor or sponsors. Sponsors help guide the company through the initial public offering (IPO) process and also provide credibility for new investors considering the IPO investment. Leading IPO sponsors are typically investment banks that take a stake in the company as well. Investors often look for wide sponsorship of a stock before investing, believing that theendorsem*ntof institutional investors adds a measure of safety to their investment decisions.
For example, Roku was one of the most highly publicized IPOs of 2017. The top underwriting sponsors (also referred to as co-managers) on the deal included Morgan Stanley, Citigroup, Allen & Company, and RBC Capital Markets.
Sponsoring Pooled Investments
Sponsors are also required for mutual fund and exchange-traded fund offerings in order to make them available to the public for investment. Anunderwritermust sponsor amutual fundissue and complete the proper regulatory registrations for investors to have access to it. The sponsor of an ETF is essentially the managerial body of the ETF that brings together the needed parties and regulatory framework to establish the ETF.
In the context ofexchange-traded funds,thefund manageror other entity who files the needed regulatory materials with the SEC to create the ETF is considered the sponsor.
Qualified Plan and Benefits Sponsors
Benefits plan sponsors are also well known in the investment industry. Plan sponsors are companies or employers who create a benefit plan for their employees. The plan sponsor can work with various entities to provide a comprehensive benefits plan. Plan sponsor benefits can include a wide range of offerings for employees including retirement savings plans, pension plans, financial wellness plans, and more. Examples of a plan that can be sponsored include a pension or 401(k) retirement plan.
As the plan sponsor, employers take responsibility for the benefit plans offered. The plan sponsor does the research, selects the appropriate service providers, deals with legal and administrative elements, and is sometimes a legal fiduciary. Those benefit programs are then offered to employees, who can join as participants.
FAQs
He agreed to be my sponsor so that I could join the club. The senator is a sponsor of the proposed bill. Verb The radio station sponsored the concert. The tournament is sponsored by local businesses.
What does sponsor mean in business? ›
Key Takeaways. Sponsors are corporate entities that provide support within the financial services industry. This support can include providing underwriting for a stock, mutual fund, or exchange-traded fund offering. Another type of sponsor is an employer that provides benefits for its employees.
What are examples of financial sponsors? ›
"Financial Sponsors" include private equity firms, growth investors, venture capital firms, family offices, and other organizations that invest in privately held businesses.
What does a sponsor do in finance? ›
In the context of a project financing, the sponsor is the entity (or entities) that owns the ultimate equity interest in the project and is typically the ultimate holding company of the borrower (who will be a special purpose vehicle established for the purposes of the project).
How do you explain what a sponsor is? ›
Sponsoring something (or someone) is the act of supporting an event, activity, person, or organization financially or through the provision of products or services. The individual or group that provides the support, similar to a benefactor, is known as the sponsor.
What is a famous example of sponsorship? ›
Olympics and Coca-Cola – 95+ years of partnership (active)
The beverage company recently renewed its sponsorship deal until 2032. Before and during every edition, Coca-Cola rolled out marketing campaigns and activations in the different host cities.
What is the difference between business owner and sponsor? ›
The word Sponsor or Sponsorship is predominately relating to money or financial support. Owner or Ownership is about belonging to or control hence responsibility.
How do sponsors give money? ›
A sponsorship is when a company commits money or resources to a nonprofit event or program in exchange for specific promotional benefits. In exchange for supporting the nonprofit, the company gets their name and logo on things like: Banners. T-shirts or wearable swag.
What is one role of a sponsor? ›
The project sponsor endorses and defends the project as a valued investment of organizational resources, an investment that serves the organization's strategic objectives. Provide approval and funding for the project. Organizations have more opportunities than funds and people to work them.
Does sponsor mean money? ›
To sponsor means to support something, an event, activity or person, usually with money. The person, organization or entity that provides the funding is called 'the sponsor'.
For example, if a company sponsors a professional team within a given sport, it will also partner with a variety of amateur and recreational teams and leagues, or it will sponsor various elements associated with the professional team, such as the league, the stadium, the team and the athletes.
What is a good sponsor? ›
Competence: the sponsor must have the knowledge, and skills to fulfil the role. For example, suitable characteristics include strategic view, leadership, collaborative champion, and an understanding of the business case and the needs of the project's client(s).
What do sponsors do for a small business? ›
Aside from financial backing, a corporate sponsor can also establish credibility for a smaller business and their event, thereby helping them to raise even more funds.
What do sponsors get in return? ›
Sponsors offer funding or products and services to support events, trade shows, teams, nonprofits, or organizations. In exchange, you get business exposure and a chance to connect with new customers.
How do you sponsor someone for a business? ›
How to Sponsor an Immigrant For Work
- Ensure the position qualifies as a specialty occupation.
- Determine the rate of pay for the position.
- Notify the U.S. workforce.
- Submit a Labor Condition Application to the DOL for certification.
- Register with the USCIS for the annual H-1B Lottery.
- Await the Lottery selection results.
The word sponsor stems from the Latin word spondre, meaning "give assurance, promise solemnly." A sponsor might support an important issue such as cancer research or education, or a sponsor might take responsibility for someone.
What are the key elements of sponsorship? ›
It can be a visual presentation or a written document, however, any way you format your proposal, it should cover these key elements:
- The Event. When asking for money, it's important to set the stage before jumping right in. ...
- Your Audience. ...
- Why Sponsor? ...
- Sponsorship Opportunities. ...
- 5 Testimonials / Social Proof. ...
- Next Steps.
To keep sponsors satisfied, focus on five pillars of establishing a worthwhile connection which resonates on both sides of the relationship:
- Communication. ...
- Brand visibility. ...
- Recognition. ...
- Creative approval. ...
- Metrics.
Some payments are both taxable and non-taxable:
Payments from a business sponsor can actually be a mixture of charitable contributions and advertising payments. If so, a portion of the sponsorship payment will be taxable.
Do sponsors make profit? ›
Profits are typically generated through the sales associated with your business or event which the sponsors made possible. However, with a well-planned and executed sponsorship recruitment plan and business or event marketing plan, you might exceed your contribution goals.
As of April 2021 USCIS guidelines, a US army sponsor with a household size of two needs at least $17,420 to sponsor a spouse or child. A sponsor with a household size of two who isn't a member of the US armed forces needs at least $21,775 to sponsor.
Is a sponsor a friend? ›
Financially sponsor him
You don't have to be a relative to be someone's financial sponsor. So, a friend can become a financial sponsor. However, the person must still have someone else who acts as the sponsor or their visa or green card application. That sponsor must be an employee, relative, or fiancé(e).
Why would a company sponsor you? ›
Businesses receive the following benefits from a sponsorship: It increases visibility for the company and its brand. It allows businesses to aim for a specific demographic of sales. It improves a company's reputation for success and refinement.
Why is it important to have a sponsor? ›
Unlike advertising, which shares specific messages about a company or product in the hopes that it will increase sales, sponsorships improve a brand's recognition and reputation because they support specific events that your target audience cares about.
