How SPVs Are Empowering Emerging Managers in a Tough Market

In This Issue:

• The rise of Special Purpose Vehicles (SPVs) in venture capital

• How emerging managers use SPVs to build relationships with investors.

• Lessons for small businesses and acquisition entrepreneurs

How SPVs Are Empowering Emerging Managers in a Tough Market

In today’s challenging fundraising environment, emerging venture capital managers are increasingly turning to Special Purpose Vehicles (SPVs) to highlight their deal flow and attract prospective investors. But what exactly does this mean—and how can the same strategy be leveraged in acquisition entrepreneurship?

SPVs: A Relationship-Building Tool for Emerging VCs

SPVs allow venture capitalists to pool investor capital for a single investment opportunity rather than through a traditional fund. Emerging managers use these vehicles to secure deals that might otherwise be out of reach and, in doing so, strengthen relationships with Limited Partners (LPs) who may have previously passed on their funds.

Brendan Baker of Rackhouse Venture Partners highlights that in competitive industries—such as AI—SPVs provide a way for emerging managers to offer investors a highly sought-after allocation in an oversubscribed round. For LPs, this means low-commitment exposure to a promising investment, making it easier for fund managers to convert them into long-term investors.

The trend is undeniable: in 2024, SPV specialist Sydecar recorded 769 SPV deals for venture-backed startups—a sharp increase from previous years. More than 35% of these deals were in the seed stage, and top sectors included financial services, enterprise software, and healthcare.

SPVs in Secondaries and Fee Structures

SPVs are also gaining traction in the venture secondaries market, where investors buy and sell existing startup shares. In Q4 2024, 43% of secondary deals tracked by Caplight involved multiple buyers or sellers, signaling that SPVs are becoming a core mechanism for liquidity in VC.

Interestingly, emerging managers—who traditionally avoided charging fees on SPVs—are now seeing them as an essential revenue stream. In 2021, only 41% of SPVs with more than $10 million in assets charged a fee; by 2023, that figure had risen to 67%.

Lessons for Acquisition Entrepreneurs

So, what can acquisition entrepreneurs and small business investors learn from this trend?

1. SPVs Can Facilitate Growth-Through-Acquisition – Instead of raising a full fund, an acquisition entrepreneur could use an SPV to raise capital for a single business purchase. This allows investors to commit to a deal on a case-by-case basis rather than committing to a blind pool of capital.

2. Relationship Building with Investors – Just as emerging VCs use SPVs to highlight deal flow, acquisition entrepreneurs can use SPVs to build trust with investors before raising a larger fund or structuring a full-scale investment vehicle.

3. Liquidity and Exit Opportunities – The rise of SPVs in secondaries indicates that investors are becoming more comfortable with flexible capital structures. Business buyers could leverage SPVs for partial sales, recapitalizations, or secondary transactions, ensuring investor liquidity along the way.

The Bottom Line

The emerging “new normal” suggests that SPVs will only continue to grow in venture capital and beyond. For acquisition entrepreneurs, understanding how to structure and deploy SPVs can provide a critical edge in raising capital, securing deals, and building long-term investor relationships.