SPV glossary

A legal entity created to pool investor capital and hold a single asset or investment.

A special purpose vehicle formed under Delaware LLC law, the most common SPV jurisdiction in US venture and private equity.

The sponsor managing the SPV, with full control and unlimited liability for management decisions.

An investor in the SPV whose liability is limited to their committed capital.

An offshore vehicle that pools international LPs into a master SPV.

A Cayman Islands feeder fund used to pool non-US LPs into a US SPV.

The contract among the SPV's members governing economics, governance, and transfers.

The sponsor's share of an SPV's profits, paid only after LPs receive their capital back.

An annual fee paid by LPs to the sponsor for ongoing administration of the SPV.

The order in which an SPV distributes proceeds among LPs and the sponsor.

The contract an LP signs to commit capital to an SPV.

A US investor meeting SEC income, net worth, or professional criteria, eligible to invest in private SPVs.

An SEC private placement exemption that allows accredited and up to 35 sophisticated non-accredited investors, with no general solicitation.

An SEC private placement exemption that permits general solicitation but requires verified accredited investors only.

An SEC safe harbor that exempts offerings made outside the United States from SEC registration.

Identity verification required for every LP before they can fund an SPV.

Verification of an LP entity's beneficial owners and corporate structure.

Regulatory controls to detect and prevent illicit funds from entering an SPV.

A request from the sponsor to LPs to fund their committed capital.

The steps to finalize allocations, sign documents, and wire capital to the underlying investment.

Back-office services for SPVs — bookkeeping, capital accounts, distributions, and tax filings.

The IRS tax form an SPV issues each LP to report their share of partnership income and deductions.

Allowing LPs to fund an SPV in their local currency rather than the SPV's base currency.

The cost an LP pays to convert local currency to the SPV's base currency.

A marketplace where LPs can sell their SPV positions before the underlying investment exits.