The traditional venture capital fund model is built around a specific commitment: an investor hands capital to a general partner, who deploys it across a portfolio of companies over three to five years. The investor has no say in which specific companies receive the capital. They are buying exposure to the GP's judgment and access, not to any particular deal.

This model works well for investors who want diversification and who trust a specific fund manager's sector expertise and sourcing capabilities. It is not the only way to invest in private companies. A growing share of private market capital now flows through deal-by-deal structures, where investors evaluate individual opportunities and decide whether to participate in each one independently. The vehicle that makes this possible at scale is the SPV.

Why Deal-by-Deal Investing Has Grown

Deal-by-deal investing has grown for reasons that are structural rather than incidental. Several forces have reinforced the model over the past decade.

The quality of information available to individual investors has improved substantially. Platforms providing data on private company financials, comparable valuations, and venture round histories have made it possible for sophisticated investors to evaluate individual deals with a level of rigor that previously required the research infrastructure of a dedicated fund. An operator with deep knowledge of a specific sector can evaluate a company in that sector with as much or more context than a generalist venture fund, even without the fund's institutional apparatus.

The universe of accessible deals has also expanded. Established venture funds have historically maintained tight control over access to their deals, limiting co-investment to LP relationships with the largest check sizes. Over the past decade, deal-by-deal access has opened through organized syndication platforms, operator networks, and direct GP relationships. An investor with a strong network in the right sector can regularly access co-investment opportunities at market terms.

Finally, the economics of deal-by-deal investing align differently than fund investing for certain investor types. An investor who believes they have an informational edge in a specific sector, a healthcare operator evaluating a med-tech startup, for example, may prefer to concentrate capital in their area of expertise rather than diversify through a fund that will deploy across sectors where they have less conviction.

How SPVs Enable Deal-by-Deal Investing at Scale

A single investor with $50,000 to put into a specific deal cannot transact directly in most growth-stage venture rounds. Minimum investment sizes at the company level are typically set by the lead investor at $500,000 or more for institutional rounds, and many companies set higher thresholds to manage cap table complexity. Direct participation at smaller sizes is generally not available.

SPVs solve this problem by aggregating multiple deal-by-deal investors into a single vehicle that meets the minimum investment requirement and appears as one entity on the company's cap table. A lead investor who has negotiated $3 million of participation in a round can distribute that allocation across 20 or 30 co-investors through an SPV, each contributing $100,000 to $300,000. The lead investor manages the SPV, represents the group to the company, and earns carried interest on any profits above the investment return.

The mechanics of this model are now well-established. A lead investor with deal access and credibility with founders organizes the vehicle, invites co-investors, handles legal formation and investor onboarding, calls capital at close, and manages the holding period through the eventual exit. The investors in the vehicle get deal-by-deal selection without the operational burden of managing each investment directly.

What has changed in recent years is the infrastructure supporting this model. Forming an SPV once required weeks of legal work, substantial upfront costs, and administrative coordination that made small deals economically irrational. Platforms that handle entity formation, subscription document collection, KYC verification, capital call management, and eventual distribution have compressed both the time and cost involved, making deal-by-deal investing through SPVs practical at deal sizes that would not have justified the structure a decade ago.

The Carry Economics of Deal-by-Deal SPVs

The carried interest economics of SPV-based deal-by-deal investing differ from fund structures in ways that matter to both leads and investors.

In a traditional venture fund, carry is calculated on fund-level returns, not deal-level returns. A GP who makes ten investments, five of which return capital and five of which generate significant gains, earns carry on the net fund return after the losses from underperforming investments are absorbed. The loss-netting feature of fund-level carry means that early distributions from strong performers may be subject to clawback if later investments in the fund underperform.

In a deal-by-deal SPV, carry is calculated at the individual investment level. If an SPV invests in a company that returns 5x, the carry is computed on the profit from that single deal. There is no loss-netting across a broader portfolio. For lead investors with strong deal selection ability, this structure is economically advantageous: gains from successful investments are not offset by losses from weaker ones. For investors evaluating individual deals, the implication is that they bear deal-level concentration risk in exchange for the selection optionality that the deal-by-deal model provides.

Carry percentages in SPV structures are typically lower than fund-level carry, generally ranging from 10 to 20 percent of profits above the return of invested capital. Management fees, if charged at all, are typically lower than the standard 2 percent annual fee in traditional fund structures, often structured as a one-time fee at formation or a fixed annual administrative fee.

The Lead Investor Role in SPV Syndicates

The lead investor in a deal-by-deal SPV occupies a role that combines deal sourcing, due diligence, investor relations, and fund administration. The lead typically negotiates the terms of the company investment, manages the relationship with the founders during the holding period, communicates with SPV investors at defined intervals, and ultimately manages the distribution process at exit.

The quality of the lead investor's execution across these functions determines much of the investor experience. Leads who communicate consistently, provide accurate and timely information about portfolio company performance, and manage the administrative side of the vehicle without errors build LP relationships that translate into repeat co-investment across subsequent deals. Leads who are inconsistent in communication or disorganized in administration find it difficult to raise capital for subsequent SPVs regardless of investment returns.

The infrastructure supporting the lead's administrative functions matters considerably. Platforms that provide standardized investor update templates, automated capital call mechanics, integrated tax document preparation, and streamlined distribution processing reduce the administrative burden on leads and improve the consistency of the investor experience. This has made it possible for lead investors who are primarily operators rather than professional fund managers to run organized SPV programs with institutional-grade administration.

Deal-by-Deal Investing and Portfolio Construction

From the investor's perspective, a portfolio constructed through deal-by-deal SPV investing looks meaningfully different from a fund portfolio. Each position was selected independently, so the portfolio reflects the investor's specific views and biases rather than a fund manager's diversification strategy. Concentration in sectors where the investor has domain knowledge is common and typically intentional.

The portfolio construction discipline required for deal-by-deal investing is significant. Without the diversification of a fund structure, a single failed investment represents a loss that is not absorbed by gains elsewhere in the same vehicle. Investors who build deal-by-deal portfolios effectively tend to apply consistent sizing discipline, resist the temptation to overconcentrate in the most exciting individual opportunities, and diversify across a sufficient number of deals to manage vintage year and sector risk.

Research on venture returns suggests that the power law dynamics of the asset class, where a small number of investments generate the majority of returns, mean that diversification across enough deals is necessary to capture the outlier returns that drive venture performance. A deal-by-deal portfolio containing only five or ten investments carries substantially more idiosyncratic risk than a fund of comparable overall size.

The Relationship Between SPV Syndicates and Venture Funds

Deal-by-deal SPV investing and traditional venture fund investing are not competing models. They are complementary, and most sophisticated participants in private markets use both.

Venture funds provide diversified exposure to a manager's deal flow, portfolio support capabilities, and institutional governance structures. SPV-based deal-by-deal investing provides targeted exposure to specific opportunities, often at more favorable economics than a fund structure. An investor who participates in a venture fund also as an LP and separately co-invests alongside the same GP in specific deals through SPVs gets the diversification of the fund combined with additional concentrated exposure to the strongest opportunities in the portfolio.

From the GP's perspective, SPV co-investment programs alongside a primary fund serve multiple functions:

• They allow the fund to invest larger amounts in its best opportunities than the fund size alone would support.

• They provide a mechanism for deepening LP relationships by offering co-investment access to investors who want more concentrated exposure to specific deals.

• They generate additional carried interest from a source that does not dilute the fund's economics for LPs who do not participate.

Allocations has built its platform to support both fund structures and SPV programs, recognizing that serious investment managers operate across both models. The ability to manage entity formation, investor onboarding, capital administration, and reporting for both funds and deal-by-deal SPVs within a single platform reflects the operational reality that these structures function together rather than independently.

The Future of Deal-by-Deal Investing

The deal-by-deal model will continue to grow as the infrastructure supporting it improves and the investor population with the deal access and sector expertise to participate effectively expands. The growth of operator-investor networks, the increasing number of experienced entrepreneurs reinvesting capital from previous exits, and the continued democratization of private market data will all support the expansion of this model.

The structural foundation of that growth is the SPV. As long as companies value cap table clarity and investors value deal-level selection, the vehicle that organizes deal-by-deal participation will remain a central feature of private market investing.