Remember 2020? While we were all baking sourdough and figuring out Zoom, something fascinating was happening in the investment world. Special Purpose Vehicles—or SPVs for those who don’t love acronyms—were quietly exploding in popularity. And honestly? They haven’t slowed down since.
But here’s what makes this story really interesting: SPVs didn’t just give more people access to hot private companies. They fundamentally rewrote the rules about when—and whether—companies need to go public at all.
What’s Driving This Growth?
The SPV market has absolutely taken off over the past five years, and it’s not hard to see why. These single-asset investment vehicles have become the darling of both established investors and newcomers trying to get a piece of action they’d never access otherwise.
The pandemic era sparked a perfect storm for SPV growth. With interest rates at historic lows and traditional investment returns looking pretty anemic, people started hunting for alternatives. Tech valuations were soaring, private markets were heating up, and suddenly everyone wanted in on the next big thing. The problem? Most of us don’t have millions lying around to meet the minimums for venture capital funds.
Enter SPVs—the great democratizer. These vehicles let groups of investors pool their money to buy into a single company or asset, usually with much lower minimum investments than traditional funds. We’re talking $25,000 or $50,000 instead of $250,000 or more.
The growth numbers tell the story. SPVs have boomed in the 2020s: Investors formed and managed a combined 1,719 SPVs on Carta between 2021 and 2023, up 198% compared to the previous three-year period SPV Spotlight: Q3 2024. Platforms like AngelList, Republic, and Carta have made creating and managing SPVs exponentially easier, lowering the barrier to entry for both sponsors and investors.
The Winners: SPVs That Made People Very Happy
Let’s talk about the success stories, because there have been some absolute home runs.
Late-stage tech darlings led the pack. SPVs that got allocation in companies like SpaceX, Stripe, and OpenAI have generated eye-watering returns for investors. OpenAI SPVs, in particular, became legendary—early investors who got in before the ChatGPT explosion saw valuations multiply several times over within just a couple of years.
Crypto-adjacent opportunities also created massive winners, despite the sector’s volatility. SPVs focused on blockchain infrastructure companies during the 2020-2021 bull run delivered exceptional returns before the market cooled.
Secondary market SPVs deserve special mention too. These vehicles bought shares from early employees or investors looking for liquidity in still-private companies. Some of the best-performing SPVs snapped up shares in companies like Databricks, Discord, and Figma at valuations that now look like absolute steals.
The common thread? Getting in early on companies with genuine product-market fit and strong growth trajectories, before the broader market caught on.
The Disasters: When SPVs Go Wrong
But here’s the thing about SPVs—they’re high risk, high reward. And sometimes, very high risk, zero reward.
WeWork SPVs became the cautionary tale everyone points to. Investors who piled into secondary SPVs at the company’s peak valuation saw their investments crater spectacularly when the IPO collapsed and the company’s problems became public.
Overhyped consumer startups burned plenty of SPV investors too. Companies in meal kits, direct-to-consumer brands, and certain fintech plays that raised at astronomical valuations during the pandemic ended up worth a fraction of their peak prices—or went under entirely.
Crypto SPVs cut both ways. While some made fortunes, others invested in projects that turned out to be poorly conceived or, in worst cases, outright fraudulent. The 2022 crypto winter was particularly brutal for SPVs that invested near market peaks.
Illiquidity traps have also caught investors off guard. Even in successful companies, SPV investors discovered they couldn’t access their gains. When companies stay private longer than expected, your paper gains don’t mean much if you can’t sell. Some investors who got into hot companies in 2020 or 2021 are still waiting for any kind of liquidity event.
What You’re Actually Paying: The Fee Reality
Understanding SPV fees is crucial because they directly impact your returns. Here’s what you need to know:
Upfront Fees
The most common upfront fees include a management fee (typically 2% of the amount committed) and an organization fee (typically 1-3% of the gross amount committed), both deducted from your capital contribution before investment What are the typical fees associated with making an investment in an SPV? — Republic.
So if you commit $10,000 to an SPV, you might pay a $200 management fee plus a $250 organization fee, meaning only $9,550 actually gets invested in the target company. These fees cover the administrative costs of setting up and operating the SPV.
The Carried Interest Question
The bigger fee conversation centers on carried interest—the sponsor’s share of profits at exit. The industry standard for early-stage VC funds and SPVs is 20% carry, with the sponsor receiving this percentage after investors get their principal back SPV (vs VC fund) Economics – Erik de Stefanis.
But here’s where it gets interesting. Some fund-of-funds investors argue that a 2/20 structure doesn’t make sense for single-asset SPVs because, unlike traditional funds where losses offset gains before carry is calculated, each SPV operates independently—meaning you could pay carry on winners while absorbing full losses on losers, resulting in an effective carry rate exceeding 25% across a portfolio of SPVs BFP #OpenLP Series — How much to charge for an SPV | by Blue Future Partners | Blue Future Partners | Medium.
This has led some sophisticated investors to push for lower carry rates on SPVs—sometimes 10-15% instead of the standard 20%—to account for the lack of portfolio-level netting.
The Fee Trend
Management fees are becoming more common in SPVs: in 2021, just 41% of SPVs with more than $10 million in assets charged a management fee, but by 2023, 67% of similarly sized funds charged one SPV Spotlight: Q3 2024. This reflects the maturing market and sponsors’ need for stable income while waiting years for liquidity events.
Some SPVs also implement tiered carry structures that reward larger investments—for example, 20% carry for amounts under $25,000, 15% for $25,000-$100,000, and 10% for amounts over $100,000 What are the typical fees associated with making an investment in an SPV? — Republic.
The Bottom Line on Fees
Let’s say you invest $10,000 in an SPV with typical 3% upfront fees and 20% carry, and the company has a 5x exit. Your $9,700 invested becomes worth $48,500. After the 20% carry on the $38,800 gain ($7,760), you’d net approximately $40,740—still a great return, but understanding the fee structure helps you evaluate opportunities realistically.
How SPVs Killed the Traditional IPO Timeline
Here’s where the story gets really interesting. The explosion of SPVs hasn’t just created new investment opportunities—it’s fundamentally changed the pressure on companies to go public.
The Old Playbook Is Dead
Rewind to 2010. Back then, a successful tech company followed a fairly predictable path: raise some venture capital, grow like crazy, and aim for an IPO within 5-7 years. Going public wasn’t just an option—it was practically inevitable. Why? Because early employees needed liquidity, early investors wanted their returns, and the company needed access to public capital markets to keep growing.
Fast forward to today, and that playbook looks quaint. Companies are staying private for 10, 12, even 15+ years. And SPVs are a huge part of why that’s possible.
Three Ways SPVs Changed Everything
1. They Created a Liquidity Escape Valve
The biggest pressure pushing companies toward IPOs used to be employee liquidity. Your earliest employees and investors have been holding illiquid stock for years, watching paper valuations soar while they can’t actually access any money. Eventually, that tension becomes unbearable.
Enter SPVs for secondary transactions. Now companies can allow select employees or early investors to sell portions of their holdings through structured secondary SPV transactions without going public. The company maintains control over who buys in, how much liquidity is provided, and when it happens. It’s not a perfect substitute for an IPO, but it releases just enough pressure to keep everyone reasonably happy for a few more years.
2. They Democratized Late-Stage Investment
SPVs have opened up late-stage private companies to a much broader investor base. Previously, if you wanted into a hot pre-IPO company, you needed to be a major institutional investor, an insider with direct connections, or wealthy enough to meet massive investment minimums.
Now? SPVs pool capital from dozens or hundreds of smaller investors with much lower barriers to entry. This means companies can raise substantial capital in the private markets without tapping public investors.
3. They Extended the Fundraising Runway
Companies can now raise money at increasingly massive valuations while remaining private. When a company needs another $500 million but doesn’t want the scrutiny and compliance costs of being public, SPVs (alongside traditional late-stage VC funds) provide that capital. The availability of this private capital has removed one of the traditional forcing functions for going public.
The Numbers Tell the Story
The evidence is stark. The median time from founding to IPO has stretched dramatically. Companies that went public in the 2010s stayed private significantly longer than those from the 2000s. Household names like Uber (founded 2009, IPO 2019), Airbnb (founded 2008, IPO 2020), and Stripe (founded 2010, still private as of 2025) exemplify this trend.
The growth of SPVs has tracked perfectly with this extended private life. The explosion of SPV activity has coincided with companies staying private longer than ever before.
But It’s Not Just SPVs
To be fair, SPVs are only part of a larger ecosystem that’s made extended private life possible:
Massive late-stage funds like Tiger Global, SoftBank’s Vision Fund, and Coatue can write $100 million+ checks without blinking.
Changing regulations: The JOBS Act of 2012 made it easier for companies to stay private longer by raising the shareholder threshold before requiring public reporting.
Lessons from public markets: Companies watched peers go public and struggle with quarterly earnings pressure, activist investors, and stock price volatility. Many decided “why rush?”
Low interest rates (until recently): The 2010-2021 era of cheap money meant investors were willing to pay premium valuations for high-growth private companies.
The Trade-offs No One Talks About
While SPVs have relieved pressure to go public, they’ve also created some real problems:
Illiquidity remains the norm: SPV profitability is often delayed, with meaningful returns taking 7 to 10 years What You Need to Know about Management Fees and SPV Profitability – Sydecar. Even if you get into a great company through an SPV, you might wait a decade to see actual cash returns. That’s very different from buying a stock you can sell tomorrow.
Valuation opacity: Public companies have earnings reports, analyst coverage, and daily price discovery. Private companies? Not so much. SPV investors are often flying blind on whether the valuation they’re paying makes any sense.
Employee frustration: While SPVs help with employee liquidity, they’re not a complete solution. Secondary programs are usually limited, and many employees still feel locked in watching their theoretical wealth grow while unable to access it.
The “never IPO” question: Some wonder if we’re creating a class of permanently private mega-companies. Is that healthy for markets? For price discovery? For retail investor access to the best growth opportunities?
The 2022-2024 Reality Check
The market correction of 2022-2023 exposed some cracks in this model. When public tech stocks cratered, suddenly those sky-high private valuations looked questionable. SPV formation declined significantly—down 34% in 2022 and another 41% in 2023 SPV Spotlight: Q3 2024
Companies that had been comfortably raising private capital at ever-higher valuations suddenly faced a choice: accept a down round, slash expenses and extend runway, or finally go public at potentially disappointing valuations.
Some chose IPO—but often reluctantly and at lower valuations than they’d hoped. The dream of staying private indefinitely ran into the reality that eventually, you need liquidity, and the private markets have limits.
The Big Picture: What Five Years of SPV Mania Has Taught Us
Here’s what we’ve learned: SPVs are powerful tools that have fundamentally reshaped both how individuals invest and how companies approach going public. The best SPVs have delivered venture-capital-like returns to people who could never access VC funds. The worst have been expensive lessons in due diligence, manager quality, and the importance of understanding fee structures.
The market has matured significantly since 2020. We’ve moved from the “everything’s going up” euphoria to a more selective, valuation-conscious environment. The bar for successful SPVs has risen—investors are asking harder questions about both returns and fees, doing more homework, and being more skeptical of sky-high valuations.
The New Reality for Companies
The pressure to go public hasn’t disappeared—it’s just changed form. Instead of “we need capital” or “employees need liquidity,” the pressure now comes from:
- Investors wanting actual exits after 10+ years
- Employees tired of illiquid stock options
- The need to use public stock for acquisitions
- Eventual limits of private market capital
SPVs haven’t eliminated the need for IPOs—but they’ve definitely made them optional for much longer. Companies can now raise billions while staying private, provide some employee liquidity through secondaries, avoid public market scrutiny and costs, and wait for their “perfect moment” to go public (which may never come).
What Hasn’t Changed
The appetite for access remains strong. People still want into great companies before they go public, and SPVs remain one of the best ways to make that happen. The key is being smart about which ones you choose, understanding both the risks and the complete fee structure, and never investing more than you can afford to lose or have locked up for a decade.
Because in the world of SPVs, success isn’t just about picking winners—it’s about understanding what you’re paying, how long you’ll wait, and whether you can afford to have your money tied up while companies take their sweet time deciding if they’ll ever go public at all.
The bottom line: SPVs have permanently changed the game. The age of the quick IPO is over. Welcome to the era of the decade-long private company, where the difference between the best and worst SPV investments isn’t just about returns—it’s about whether you still have your capital at all, how much of your gains you get to keep after fees, and whether the company you invested in will ever actually go public.
The humble SPV has become one of the most consequential financial innovations of the 2020s, for better and for worse.