What Is an SPV, and How To Set Up SPVs with SPV Platforms & CRMs?

About the Author: Polina Alexandrova has been involved in setting up SPVs in different jurisdictions and opportunistically organises angel syndicates whenever an exciting deal hits the table.

Structuring an SPV investment may appear to be a complex and time-consuming activity. Multiple stars need to be aligned: getting allocation in the best deals, gathering commitments from investors, as well as choosing an SPV structure that both complies with financial regulation and is tax optimised for all SPV investors. Whether you’re a venture capital investor, business angel or simply curious about what it takes to set up and manage SPVs, this article provides the ultimate SPV guide for you.

What Is an SPV?

Special Purpose Vehicles (SPVs) are legal entities established for the sole purpose of pooling capital from different investors in order to collectively invest. Within the tech ecosystem, SPVs are a great legal structure for:

Angel syndicates: angels coming together on their own initiative to make an investment. SPVs used for angel syndicates are generally organised by a Syndicate Lead or Lead Angel, who scouts a great investment opportunity, prepares an investment memo, shares the deal with potentially interested investors and selects the optimal legal partner to set up and manage the SPV. Angel Synidcates vary in size and exclusivity. For example, a popular angel platform is eu.vc.
Crowdfunding platforms: popular platforms like AngelList, Crowdcube and WeFunder enable investors with smaller ticket sizes to invest into startups and venture capital (VC) funds.
Follow-on investments by VC funds: SPVs are typically set up by VCs to take full advantage of pro-rata rights in outstanding portfolio companies, if there is insufficient capital left in their existing fund.
Club deals: some VC funds even use SPVs for club deals. For example, AltaIR Capital operates AltaIR Club, which enables employees and other angel investors in their network to co-invest with AltaIR Capital.

As an interesting fact, SPVs can be organised in a way that is exempt from requiring brokerage, investment advisory or other licences from the financial regulator. SPV regulation varies in each country e.g. in the UK, SPVs are regulated by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA), and in the US, by the Securities & Exchange Commission (SEC), and in the European Union, general guidelines are provided by European Securities & Markets Authority (ESMA) and interpreted by each member state.

What Are The Advantages of SPVs over VCs for Investors?

SPVs are becoming increasingly popular in the global tech ecosystem and are frequently used to co-invest alongside larger venture capital funds. As mentioned in Forbes, the number of SPVs formed almost doubled from 2020 to 2021 and a lion’s share is used for tech investments.

There are 7 benefits for investors allocating capital to SPVs in comparison to VC funds:

Active investment decision-making: each investor decides on a deal-by deal basis to which SPV investment opportunity they allocate capital. The Syndicate Lead (SPV organiser) doesn’t manage capital on behalf of other investors. On the contrary, investors in VC funds, also known as Limited Partners (LPs), have no control over investment decision-making. Decisions to invest are made by an Investment Committee in the VC fund, which consists of senior employees and partners.
Active investment management with voting rights: generally speaking, European angel syndicates that are exempt from financial regulation offer all investors voting rights on important decisions, such as whether or not to sell the SPV. Voting rights are typically not proxied to the Syndicate Lead. The Syndicate Terms of each SPV provide a detailed overview of SPV governance.
Protective asset ring-fencing: SPVs can be structured either as a stand-alone legal entity that executes one investment, or as a ring-fenced series or compartment of one company. An example for Delaware LLC SPVs would look like “[Startup Name], a Series of [SPV Company Name]”. When multiple SPVs are made as compartments or series by one holding company, the gains and losses of each compartment or series are legally and financially insulated from each other.
Immediate distribution: thanks to the ring-fenced structure, each SPV series holds just one investment. So, when the underlying asset of the SPV is successfully sold, the SPV beneficiaries immediately receive their returns. On the other hand, LPs have to wait until the end of the VC fund’s lifecycle to get their money back.
Smaller ticket sizes: in general, there are no strict legal requirements regarding the min. ticket size of SPV investors. This threshold is typically set by the SPV organiser. The smallest entry tickets are usually $1K-10K per SPV. As a result, SPVs democratise alternative investments by providing investors who have fewer resources with access to great deals. Participation in more deals enables SPV investors to reduce risk by building a larger and more diversified portfolio.
Lower fees: SPVs often charge significantly fewer fees than VC funds. VC funds take a 2-2.5% annual management fee in order to cover operating costs, including legal or M&A advisors, employee salaries, office rent, and software subscriptions, among others. SPVs, on the other hand, can be structured in a way to avoid being classified as Alternative Investment Funds (AIFs). This means they don’t need to obtain various financial licences and they incur few direct maintenance costs e.g. accountant fees for annual reporting, bank account fees etc. Therefore, SPV organisers charge a one-off deal structuring fee and no management fee.
Secondaries: depending on the SPV operating agreement or articles of association, SPV investors can have the right to sell their ownership stakes to other SPV shareholders or third parties. This creates more liquidity and gives SPV investors the freedom to realise returns before the entire SPV is sold. SPV secondaries often include a "right of first refusal," giving existing investors the privilege to purchase shares before they’re offered to external buyers.

4 Key Steps To Structure an SPV Investment

Assuming the SPV is co-investing and non-leading an investment round, there 4 crucial steps to execute an investment using an SPV:

1. Source the Best Investment Targets

Sourcing the best deals is fundamental to achieving outlier returns for yourself and your SPV investors. This can be done by networking with other investors and founders or by directly approaching exciting startups after building conviction on emerging industry trends. If the introductory call with the startup goes well, the SPV Lead does a deep dive on the business model, industry trends, traction, competition and founding team, to understand whether the startup’s unique selling proposition (USP) is strong enough and can be defended. During the deep dive there is regular exchange with the startup, which typically provides data room access. This information is used to create an investment memo, which can be shared with potential investors for the SPV.

Top 4 tips to source the best deals for your SPV:

Emphasise value-add: stress your value-add for the startup e.g. offer to introduce the startup to relevant angel investors who typically join your SPVs and who you will be approaching regarding this deal. Relevant angel investors are those who can share operational experience, make introductions to potential partners or clients or are simply great names to have on the cap table.
Confirm allocation: before beginning your SPV investor reach-out, negotiate an allocation in the funding round upfront, which will be your SPV target. Gathering commitments and structuring the SPV takes at least one month, so confirming an exact allocation amount reduces the risk of being left out if the round becomes oversubscribed.
Invest in your own SPVs: only build SPVs for the best deals and invest personally in each one. This flags your conviction to each investor you will approach.
Incentivise deal sharing: one great strategy for deal sourcing is to incentivise business angels, venture capital investors, founders and other contacts in your network to refer great deals by reducing the carried interest charged in the SPV.

2. Build an Investor Funnel & Secure SPV Commitments

Structuring an investor funnel, reaching out personally to each investor and closing commitments is an enormous effort, which is difficult to manage without a CRM. In most cases, the Syndicate Lead strategically constructs a funnel of 100+ potential accredited investors, consisting of close contacts, acquaintances and new contacts to whom a warm introduction can be made. If your current investor network is not big enough, grow it by attending tech conferences and side events.

Here are 7 tips on raising capital for your SPV:

Approach closest contacts first: reach out to the closest investor network first, gather verbal commitments, and only afterwards reach out to acquaintances and request introductions to new contacts. It’s always better to approach acquaintances with some capital already committed verbally.
Optimise communication channels: contact each investor using their most convenient channels, which may be Whatsapp or Telegram, rather than email. You would not believe, but at least 50% of commitments for my SPVs I received after messaging investors rather than sending long emails.
Consolidate Q&A: keep your first investor reach-out concise and to the point. Only share a long investment memo when an investor shows interest. The golden rule is – the more information you share upfront, the more questions investors will ask. In most cases, SPVs need to be put together under high time pressure, so gather all answers to frequent investor questions into one master document from which you can copy and paste.
Use a CRM: leverage a CRM to keep track of investor reach-outs, follow-up reminders, rejections and commitments. Learn more about best CRM tools for Syndicate Leads in the next section, or discover more about top CRMs for angel investors and venture capital funds.
Do paperwork last: only when you have sufficient verbal commitments, begin the legal and admin paperwork. There is no point to incur legal costs until the minimum threshold to participate in the startup’s funding round has been reached. Furthermore, it is a waste of time to ask investors to sign any SPV agreements and transfer funds when there is uncertainty.
Reward investor referrals: offer incentives to existing SPV investors for referring other investors by reducing carried interest or investor club membership fees, if you charge any.
Ensure SPV compliance: keep in mind financial regulation when sharing the investment opportunity within your network. For example, in the European Union, the Syndicate Leads of unregulated SPVs are not allowed to publicly promote investment opportunities on platforms like LinkedIn. In general, the Syndicate Lead needs to comply with every jurisdiction from which their SPV investors come from. Disclaimer: This article does not provide any legal advice on setting up SPVs.

3. Set Up SPV & Onboard Investors

Select an SPV structure that is compliant with all regulators and protects you as a Syndicate Lead. There is no point in taking risks and operating in the grey zone. For this step, you can engage an experienced legal firm or use one of the many SPV-as-a-Service platforms, which offer standardised legal SPV document templates. Once the documents are finalised and approved by the Syndicate Lead, they are shared with the investors. Subsequently, investors transfer their committed capital to the SPV's designated bank account.

Here are 5 tips on structuring your SPV:

Optimise taxation: double check that there are no withholding taxes between the Startup <> SPV as well as SPV <> Investors. Nothing is more disappointing for your SPV investors than having a significant percentage of their returns withheld due to gaps in the Double Taxation Agreements.
Negotiate exchange rate: if you are investing 7+ digit sums via SPV, you should negotiate exchange rate fees with various banks.
Use side letters: if you offer an SPV investor special terms e.g. for referring deals or another investor, this is typically done via a side letter.
Choose the best SPV platform: invest your time in comparing different SPV-as-a-service platforms, or contact me (polina@calendula.vc) for a free template on questions you should ask every SPV provider.
Get creative with the name: choose a unique, memorable name for your SPV, which will be on the cap table. I named mine after a flower.

4. Execute Startup Investment & Celebrate

While SPVs may not lead investment rounds, they undertake the essential formalities. Depending on the jurisdiction, this usually involves signing Share Purchasing Agreements (SPA), Shareholder Agreements (SHA) and Articles of Association with the startup. Funds are then transferred from the SPV to the startup, and the Syndicate Lead receives a Share Ownership Certificate as a confirmation. This formalises the SPV’s ownership stake. Now you are taking part in the startup's journey.

Here are 2 last tips for crossing the final hurdle:

Execute the deal after all SPV funds arrive: only sign the SPA & SHA when all of the committed funds have reached your SPV’s bank account. Nothing would delay the funding round more than having to adjust your SPV’s total investment around due to one last minute cancellation and having every investor in the round re-sign all documents.
Celebrate 🎉: once everything is completed, pat yourself on the back! Closing an SPV is a huge effort.

How Do SPV Platforms Facilitate SPV Investments?

Most SPV platforms support the Syndicate Leads by doing the legal and administrative work required to set up and manage SPVs. SPV platforms typically offer standardised one-size fits all documents with some customisation regarding the one-time deal structuring fees that the Syndicate Lead charges investors and the carried interest. Additionally, some of these platforms have also built communities of accredited investors, which Syndicate Leads can access to share their deals and additional pool capital. In this case, the SPV platform also takes a cut of the carry.

What Are The Top 8 SPV Platforms?

Here’s our shortlist of the best SPV platforms on the market (note, the flags indicate in which jurisdictions each platform structures their SPVs):

Roundtable 🇫🇷 🇱🇺: limited to Europe, Roundtable targets both business angels looking to invest and startup founders seeking investments. Whether the SPV is set up by a lead angel or a startup, Roundtable handles the admin work: ensures regulatory compliance, customises the SPV legal docs, performs Know Your Client (KYC) / Know Your Business (KYB) checks, manages SPV bank account and fund wiring. Roundtable takes 1% of the amount raised by the SPV (minimum fee of €5K, maximum €15K) and charges some fees associated with secondary sales.
Odin 🇬🇧: helps founders, angel investors and VCs globally to raise and deploy capital via SPVs. Odin takes care of all the paperwork, including custom syndicate agreements, entity formation, banking, investor onboarding and self-accreditation, KYC/KYB and tax documentation. There is also a private community of value-add angels who are granted curated, early access to top deals from Odin’s network. Odin offers 3 pricing tiers, with branded and non-branded SPVs capped at $10K, while founder-organised SPVs are capped at $2.5K.
Vauban 🇬🇧 🇱🇺 🇻🇬 🇺🇸: structures SPVs for angel syndicates and also helps first-time General Partners (GPs) to launch VC funds with standardised legal documentation. When a Syndicate Lead adds a deal to their portfolio, their investor network on Vauban is notified and can commit easily with the investor subscription process. Pricing is transparent, with 4 plans that all manage the SPV bank account, conduct KYC and offer live chat support. Most significantly, the pricing plans offer both UK (Nominee, Club Deal, Institutional) and international SPV structures.
AngelList 🇺🇸: a community-led SPV platform for angel investors to share deals with their followers. AngelList offers a thorough end-to-end service for setting up Delaware SPVs, covering legal docs, investor KYC/KYB, fund wiring, active investment valuation tracking and tax filings. Additionally, investor scouting becomes much easier with the AngelList Capital Network of accredited investors. In fact, 61% of syndicate funding comes from AngelList’s platform investors. Pricing for structuring an SPV is fixed at an $8K setup fee with a $2K flat fee to cover blue-sky fees for US-based investors. AngelList offers an extensive range of add-on services like management of crypto assets, which cost extra.
Leva 🇨🇭: offers a unique SPV structure, where the Syndicate Agreements are designed to eliminate any counterparty risk. Customers are protected in any circumstance even if the SPV platform becomes insolvent like Assure. Leva helps Lead Investors offer co-investment opportunities to their private investor network by automating legal structuring, compliance, and banking. From Leva, Syndicate Leads can send private deal invitations, accept soft commitments, close deals online, share reports, and manage follow-on rounds. The cost of setting up an SPV is 1% of the capital raised capped at 10K CHF.
Allocations 🇺🇸: one of the leading SPV platforms in the US for Delaware SPVs. A go-to for preparing documentation, Allocations takes charge of entity formation, bank account setup, investor onboarding, regulatory filing, tax preparation and legal doc templates. Unlike most other platforms, Allocations does not charge a fee for ownership transfer of SPV shares. It costs $3.5K to set up a micro SPV ($100K fundraising limit, max 20 investors), $8K for a standard SPV (max 35 investors), and $14K for a custom SPV (max 50 investors, 5 asset cap). Add-on accounting packs start at $300/month, with services including bookkeeping, receipt management and bank reconciliation.
Bunch 🇩🇪 🇳🇱: Syndicate Leads can establish regulated and unregulated SPVs, using the platform to onboard co-investors. Bunch ensures compliance by performing KYC/KYB and AML checks, and opens a dedicated bank account to manage the transaction. The platform stands out for features including investor reporting and portfolio performance tracking. The pricing plans for unregulated German SPVs, called Club Deals, include a one-off set up fee ranging from €1-3K and annual SPV management fees of €1.5K, €3.5K and €7K depending on the SPV structure selected (GbR, GmbH and GmbH & Co. KG). In general, Bunch may end up being more expensive than competitor SPV platforms if you intend to hold the asset for over 5 years.
AQUATY 🇩🇪🇪🇺: enables Syndicate Leads to manage angel investor networks and offer Club Deals with end-to-end digital process, including features like KYC/KYB and AML checks, data rooms, reporting and portfolio management. The platform offers Branded and non-Branded SPVs. Branded SPVs essentially allow Syndicate Leads to use their own holding structure registered in the EU and take advantage of AQUATY’s brokerage licence. This gives the Syndicate Lead more leeway in how they communicate the investment opportunity and which investors they can approach (non-accredited investors can participate in the SPV). Branded SPVs are fully self-controlled and therefore protected from insolvency, while AQUATY still covers the regulation. Non-Branded SPVs are fully managed by AQUATY Ventures GmbH. The Syndicate Leads can use both Branded and non-Branded SPVs for an infinite number of deals and investors can differ from deal to deal. SPVs incur a one-time fee of €8.9k when using Aquaty for the first time. Additionally, the costs per deal is 0.5% of the deployed capital plus a monthly platform software fee. This makes Aquaty a bit pricey relative to other SPV providers if used just for one or two deals in total.

Please note that SPV platforms tend to change their pricing and therefore the information provided is only actual for the date of the article’s publication. If you are an SPV platform and would like us to update pricing information, please contact us at hello@tiva.so.

👉 If you’re interested in a more comprehensive breakdown of the top SPV platforms or a free list of questions to ask every SPV platform, reach out to the author at polina@calendula.vc

How Do CRMs Streamline SPVs?

The very foundation of successful SPV formation hinges on 2 critical steps: identifying promising investment targets and assembling a committed group of investors. Plus, once an SPV is built, smooth management of the portfolio and investor relations is crucial to ensuring stressful free operations. The tech ecosystem is a relationship driven industry, so the earlier you invest in proper contact management software, the more effective your startup and investor communications become.

CRM tools excel in simplifying these 3 relationship-driven steps of setting up SPVs, ensuring that no opportunities slip through the cracks:

1. Deal Sourcing

CRMs are used to build dealflow funnels, as well as record all startup interactions, source of introduction and notes. If you select an industry-specific CRM that is focused on the investment use case, like Affinity or Attio, the CRM data on startups is enriched with key information on last funding round, stage, total capital raised, existing investors and industry. These additional insights can be used for filtering startups in your CRM, but you can also add custom tags. When setting up SPVs as a team, any CRM will also help align workstreams and startup communications.

2. Investor Sourcing & Relationship Management

CRMs empower Syndicate Leads by putting together a potential SPV investor funnel and automating outreach. In CRMs, you can assemble various contact lists in advance with all angel investors, family offices and some venture capital investors who make direct startup investments outside of the fund, when there is no conflict of interest. To populate an investor funnel, look through your network, identify investor targets for the particular opportunity and add them to your “SPV [Startup Name] Funnel”. Using the CRM tool, SPV Leads can keep track of the status of interactions with every investor. To automate reach-outs, most CRM features include templates, which can be used to quickly replicate and personalise the first email, which shares an overview of the investment opportunity. Other CRM tools like Lemlist automate follow-ups, which can be written in advance. Overall, CRMs ensure that investor scouting efforts are thorough and well-coordinated.

3. Portfolio Management

As the Syndicate Lead’s startup portfolio grows, the need for effective portfolio management becomes increasingly evident. CRMs come to the rescue by supporting the creation of distinct lists of investors for each investment, outlining their investment amount, ownership stake etc. Creating contact groups in CRMs streamlines investor reporting and makes it easier to organise SPV shareholder meetings. For most unregulated SPVs investors need to vote on key decisions e.g. decide whether to exit the entire SPV.

Why Use Tiva CRM for SPVs?

Tiva is built to supercharge relationship-driven industries, which makes it a perfect CRM for managing SPVs. Crucially, Tiva has a unique set of features that streamline contact management so users can nurture long-term relationships with investors and founders. It is suitable for both solo Syndicate Leads as well as teams.

Centralised professional network: Tiva centralises contacts from a variety of platforms including LinkedIn, private and company emails, calendars, phone contacts and more. With everything in one place, it’s much easier for a Syndicate Lead to manage all founder and investor relationships.
Extensive contact & company enrichment: sophisticated integrations with LinkedIn, Crunchbase and Chat GPT enable unparalleled CRM data insights. For contacts, Tiva imports all career experiences, location, education, skills, industry and date connected. For companies, Tiva shows the number of employees, industry segment, funding stage, investors, capital raised and more. Thanks to the CRM data enrichment, Syndicate Leads can personalise outreaches to founders and investors, without spending time researching and manually adding data to the CRM.
Advanced search capabilities: easily search for relevant contacts or companies using more than just their names, with custom or auto-generated tags, industry, location or calendar events. Therefore, filling up your potential SPV investor funnel is much simpler, and is not dependent on having an exceptional memory.
Dynamic lists: smart lists in Tiva update themselves automatically as new contacts are added to your network (via email or on LinkedIn) who match the parameters you pre-define. For example, everyone with the keywords “angel investor” can be added to your “Potential SPV Investor Target” list.
Proactive notifications: receive alerts and updates on key network changes and events you want to track. Stay on top of job changes, career milestones, company employee count growth, fundraising events and more. Syndicate Leads can be notified when startups in their “Startup Tracking” list raise new funding rounds and it may be a good time to reconnect.