SPVs And The Reshaping Of Venture Capital

Special purpose vehicles were always the sort of tool investors used only occasionally, in special circumstances. A hot deal. A founder who didn't want 100 angels on the cap table. A one-off opportunity that didn't quite fit inside a fund's mandate. SPVs were the exception.

In 2025, they stopped being that. As Forbes put it recently, SPVs went from an edge case to a core strategy. That is not a cosmetic change. It says something meaningful about how venture capital is now structured, and how both investors and startups are adapting to a market that no longer behaves the way it did previously.

If you strip away the jargon, an SPV is a very simple idea. It is a separate legal entity, usually an LLC, created to make a single investment. Investors put money into the SPV, and the SPV invests in the startup. The startup sees exactly one investor on its cap table, even though that investor may economically represent dozens or hundreds of people. When the investment pays off (or doesn't), the proceeds flow back through the SPV to the underlying investors.

That structure has existed forever. What changed is that it is now standardized, efficient and cost-effective to create SPVs at scale, thanks to automated platforms like AngelList and Carta. You can create an SPV, onboard investors, collect capital and close a round quickly and relatively inexpensively. Administering that SPV on these platforms is also efficient and cost-effective.

From the investor side, the appeal is obvious. Traditional venture funds are blind pools: you commit capital up front, lock it up for a decade and trust that the GP will deploy it wisely over time. That model works best when markets behave efficiently. It is less appealing when valuations feel uncertain and exits take longer. In that environment, many investors would prefer to decide deal by deal.

SPVs let them do that. You can look at a specific company, at a specific price, with specific terms, and say yes or no. You can write a smaller check than would be practical as a direct investor, while still getting access to deals that might otherwise be closed to you. And because most SPVs charge only carried interest, but not annual management fees, investors are not paying for years of overhead on capital that has not yet been deployed.

There is also a reputational and strategic angle. For angels with large followings or emerging managers, SPVs are a way to build a track record without raising a full fund. You prove that you can source good deals, allocate capital intelligently and return money. That could be a stepping stone to a more traditional fund. This alternative pathway for breaking into the clubby venture world didn't used to exist. Historically, if you wanted to pursue a career in venture, you had to work for a VC firm and hope to advance from an analyst to associate to principal. Otherwise, you had to sell a startup with a huge exit or just be independently wealthy.

Founders, meanwhile, are not merely tolerating SPVs; many actively prefer them. The most obvious benefit is cap table hygiene. One SPV is much easier to deal with than twenty individual angels, particularly when it comes time to raise the next round. SPVs also move quickly. Because the documentation is standardized and the decision-making authority is concentrated with a manager, deals can close faster, which is often a decisive advantage in competitive rounds.

There is a subtler benefit as well. SPVs allow startups to tap broader pools of investors without broadening their governance platform. The company deals with one investor; the complexity lives inside the SPV, not inside the startup. That matters more as companies stay private longer and raise more rounds.

So why now? Why did SPVs become "core" in 2025 rather than 2015?

Part of the answer is simply the emergence of automated platforms. Once it became easy and relatively inexpensive to create and administer SPVs, people started using them. But the more interesting answer has to do with risk. Venture capital used to be about portfolio development over time. You raised a fund, invested steadily in a portfolio of startups, and hoped that market conditions would cooperate by the time your best companies exited. Today, market conditions are less cooperative, exit timelines are longer and valuations are uncertain. SPVs reflect a desire to underwrite specific risk rather than general exposure.

What does all of this mean for the venture ecosystem?

It means venture capital becomes more diverse. Instead of a world dominated by large, monolithic funds, you get a mix: many traditional funds, but a growing number of SPVs assembled around specific opportunities. Deals get done faster. Another possibility is that investors pick deals rather than portfolios. That, in turn, may change how track records are evaluated and how emerging managers are assessed.

That may not be the old venture model, but it increasingly looks like the new normal.

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