Successfully launching an investment entity has everything to do with properly structuring and administering the vehicles that are used to invest in private assets. This is true whether these private assets are start-up companies, real estate projects, secondary opportunities, farmland, art, films, opportunity zones, or almost any form of private asset with the potential of creating value.
Assure is the leading provider of SPVs, transforming of how venture investment vehicles are structured and administered. This trend continues to have a profound impact on investors and entrepreneurs in the private venture investment marketplace. Nowhere has this been more evident than in the process of setting up Special Purpose Vehicles (SPVs), a rapidly growing venture investment entity. It is now easier, faster, and less expensive to set up and manage an SPV than at any other time in history.
The phrase “special purpose vehicle” is an apt description – an SPV is an investment vehicle established for a special purpose. If we reduce an SPV down to its fundamental purpose, at its core it is a legal investment structure that enables the pooling of capital in order to invest in a particular private asset. For a capital-raising SPV, that purpose is almost always to raise capital that will be used to invest in or purchase an asset or stock in that asset.
In this series, we will drill deeper into all five of these areas of expertise and where they apply to the 17 stages of setting up and managing a capital-raising SPV throughout its lifecycle, devoting a separate page to each stage. The series will proceed in chronological order through all 17 steps, rather than ranking them in importance or by the time and resources required by each. The relative importance and resource demands of each step in the Anatomy of an SPV can vary from one SPV to another.
Explore the 5 areas of expertise and 17 individual steps of the Anatomy of an SPV below:
A Capital-Raising Special Purpose Vehicle (SPV) is comprised of these 17 fundamental steps. Hover over any of these steps to learn more.
In recent years, the entrepreneurial venture economy has seen the emergence of a new generation of investors with a penchant for rapid action. Many of these investors are “super angels,” predominantly leaders with entrepreneurial experience who want to invest in the next generation of products and services without having to endure delays or get bogged down in minutiae that consumes their time, energy and cash.
This need for speed rapidly mushroomed throughout the entrepreneurial investment ecosystem, creating a demand for flexible capital formation services without the structural and administrative demands typically associated with venture fund formation.
Capital-raising SPVs offer entirely unique benefits for investors. Some of the most notable include deal-by-deal carry and the empowerment of high-volume investment syndicates.
However, prior to the advent of Assure, the widespread adoption of capital-raising SPVs had been hampered by high set-up costs and slow, onerous administrative processes. Consequently, many deals that would otherwise have been best set up as SPVs were instead structured as venture capital funds. In addition, many high-volume syndicate deals that lend themselves perfectly to the SPV structure simply didn’t get done.
For Assure’s clients, a capital-raising SPV is far more than a simple legal structure. It’s the lifeblood of the quick deal. We created the “Assure SPV” to be everything an SPV organizer will need -- with all the legal, tax, compliance, administration, banking and if needed, accounting -- to set up, close and manage an investment vehicle.
With an Assure SPV, investors pay one minimal flat fee. Though investors are involved in strategic decisions, the Assure team manages every aspect of the entity throughout its life cycle, from set-up to shut down. This expedites fund set-up and frees investors to focus on their high-value areas of expertise -- finding and supporting quality deals.
In addition to its own SPV products and services, Assure created and provided the backend for prominent investment platforms such as SeedInvest and AngelList. A growing host of SPV deal organizers and syndicates have taken full advantage of Assure’s game-changing service offerings, anchored by the company’s innovative Glassboard technology platform, which simplifies and automates a growing number of structuring and administrative processes.
Setting up and managing a capital-raising SPV can be compared with the process of building a house. In both cases, there are risk factors, structuring decisions, administrative fees and requirements, and governing rules and regulations.
Risk - Potential homebuyers weigh such risk factors as size, quality of design and materials, neighborhood and location within that neighborhood in deciding whether to buy and how much to pay. Likewise, investors weigh risk factors such as leadership team quality, market size, product/market fit and intellectual property.
Structure - The cost of a home’s structure depends on the size, quality of materials (brick or stucco, sheetrock, windows, wiring/pipes, etc.), labor and features. SPV structure cost variants include entity type, legal and administrative fees, among others.
Administration - For homeowners, administration expenses include the costs to maintain the home, such as annual taxes, water, gas and electricity, lawn care and perhaps HOA fees. SPV administrative costs include entity maintenance fees, taxes, K1s, distributions, exits, shutdowns, etc.
Rules - These are imposed by the government in order to protect consumers. They include elements such as plumbing and electrical code requirements, building permit requirements, how far back the house needs to be from the street and how tall it can be. SPVs are governed by an array of analogous rules set up to protect investors, entrepreneurs and the public.
Legal Disclaimer: Please consult your attorney; this article is not meant to be legal advice.