Deal structures
SPV Secondaries
How a special-purpose vehicle pools many small buyers into a single line on the cap table.
Most marketplace secondaries at angel check sizes ($10K–$100K) don't transfer shares directly. Instead, an SPV — a single-purpose LLC formed just to hold this one position — buys the seller's shares, and individual investors buy a slice of the SPV. The company sees one new name on its cap table (the SPV), not a dozen.
This solves a real problem: most companies won't approve a transfer that adds many small individual holders to their cap table, but they will approve one professionally-run vehicle. The tradeoff is that the SPV manager charges fees for running the vehicle — and those fees compound over what can be a multi-year hold.
How it works
- The SPV manager negotiates a purchase price with the seller, forms the LLC, and raises capital from individual investors to fund the purchase.
- The company approves the transfer of shares (or the underlying instrument) into the SPV's name — this is the one transaction it has to consent to.
- Investors hold an interest in the SPV, not the underlying shares directly, until the SPV distributes proceeds after an eventual company exit or wind-down.
- At exit, the SPV manager typically takes a carry (a share of profit) and has usually charged an annual management fee along the way.
Worked example
An SPV buys a $240,000 block of common stock (a 20% discount off a $300,000 last-round mark) on behalf of 8 pooled investors. The SPV charges a 2%/year admin fee and 15% carry, and the position is held 4 years until the company exits at a 3x mark-up.
- Purchase price (20% discount off $300,000)
- $240,000
- Exit value at 3x gross
- $900,000
- Admin fee (2%/yr × 4 yrs, simple)
- $19,200
- Profit before fees ($900,000 − $240,000)
- $660,000
- Carry (15% of profit)
- $99,000
- Net to investors ($900,000 − fees − carry)
- $781,800
- Net MOIC vs. gross 3.75x
- 3.26x
Why it matters: The discount at entry looked like the whole story, but fees and carry took about 13% of the gross exit value in this example — the real comparison is net MOIC after the vehicle's economics, not just the entry discount.
Watch out for
- Ask for the SPV's full fee schedule (management fee %, carry %, any setup or transaction fee) before committing — it is rarely front-and-center in a marketing deck.
- You hold an LLC interest, not shares — your rights, reporting (often a K-1), and timeline to liquidity all run through the SPV's own operating agreement.
- A stacked SPV (an SPV investing into another SPV that holds the actual shares) adds a second layer of fees — ask directly whether the vehicle is a single layer.