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Intro

• Many new VC funds are setting up SPV structures to enable their LPs to participate directly in their deals
• This is a popular approach and can build AUM and scale the number of LPs quickly for emerging managers

SPVs can increase your number of LPs

• 249 investor limit per SPV (SPV must be a Qualifying Venture Capital SPV)

SPVs bring co-investing opportunities to your LPs

• Enable your LPs to participate directly in your deals to gain additional exposure

SPVs can increase AUM

• Each SPV raised by the Fund Manager adds additional AUM to their total VC fund size
• A hybrid SPV + Fund strategy allows Fund Managers to scale AUM much faster

SPVs can lower the minimum cheque

• The minimum cheque for an SPV can be as low as $5,000 (or lower), which makes it more accessible to LPs with smaller cheque sizes
• For a fund with a limited number of spaces for investors
• 3c(1) — Up to 249 investors for up to $10m AUM VC Fund

SPVs are supportive to portfolio companies

• Portfolio companies are often grateful to Fund Managers who can aggregate their smaller cheques into an SPV structure
• This enables more investors to participate in the portfolio company and avoids congesting their cap table
• Empower portfolio companies by running SPVs for them

Conclusion

• A hybrid SPV + Fund strategy can be used effectively to scale AUM, increase participation, increase number of LPs and support portfolio companies

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