SPV Structure and Documents

What is a double-layered SPV?

A double-layered SPV is a SPV that does not directly own shares of the underlying private company. Instead, it gets investment exposure to the private company by owning shares of another SPV that owns shares of the underlying private company.

Do I own direct stock in the company?

No. As an investor in an SPV, you own an interest in the SPV entity itself, which in turn holds shares of or has investment exposure to the underlying company or holds shares in another SPV that holds shares of or has investment exposure to the underlying company. Your economic rights flow through the SPV structure, giving you indirect exposure to the company's performance and liquidity events.

How are these investments custodied?

Currently, these assets are self-custodied by the Issuer and held on the books and records of the applicable SPV. As SPVs are private investments, they often do not qualify for SIPC coverage.

Why do SPVs have minimum investment amounts?

Many SPVs maintain minimum investment thresholds that range from $10,000 to $50,000+ depending on the SPV's target size. These minimums exist for a few primary reasons:

• Regulatory limitations: Most SPVs are structured as 3(c)(1) funds under the Investment Company Act, which restricts them to a maximum of 99 investors. Based on the company's minimum investment amount and the SPV investor cap, minimum investment thresholds are necessary to ensure SPVs satisfy the regulatory compliance and company requirements.
• Operational economics: There are fixed costs associated with investor onboarding, compliance verification, document preparation, and ongoing investor relations that make very small investments economically unfeasible.

By establishing appropriate minimum investment thresholds, SPV managers can strike the optimal balance between accessibility and operational efficiency, ensuring the vehicle remains economically viable while providing access to opportunities that would otherwise be unavailable to individual investors.

What is a Subscription Agreement?

A Subscription Agreement is a legally binding contract between an investor and an investment vehicle (such as an SPV) that formalizes the terms of the investment. This agreement includes:

• Investment amount.
• Representations and warranties from the investor.
• Transfer restrictions and liquidity provisions.
• Rights and obligations of all parties.
• Governing law and dispute resolution mechanisms.

The Subscription Agreement is a critical legal document that investors should review carefully before signing. Our platform facilitates digital execution of these agreements to streamline the investment process. You will be required to sign this document digitally as part of the order submission process.

What is a Private Placement Memorandum?

A Private Placement Memorandum (PPM), also called an Offering Memorandum (OM) or Offering Circular (OC), is a comprehensive disclosure document provided to prospective investors in a private placement. The PPM includes:

• Detailed description of the investment opportunity.
• Risk factors specific to the investment.
• Terms of the offering and investor rights.

The PPM serves as the primary information source for investors evaluating a private placement opportunity and should be reviewed thoroughly before making an investment decision. Reviewing the PPM is part of the order submission process.

What is the Risk Factors document?

The Risk Factors document provides investors with general risk disclosure information regarding investing in private companies, the underlying private company in which the SPV is investing, as well as any transaction risk associated with the SPV offering. For example, if an SPV is a “double-layer” structure, where one SPV is investing in another SPV that owns shares in the private company, that factor will be disclosed in the risk factors document. Investors should read the risk factors document carefully before making an investment decision

What is an Operating Agreement or LLCA?

Each SPV is a separate, bankruptcy remote LLC. The LLCA or Operating Agreement defines the structural, organizational, and operational matters associated with each LLC. Such matters include, amongst other things; the name of the entity, jurisdiction of formation and operation, operating procedures, rights of the members, taxes, distributions and transfers. Investors should review the LLCA or “Operating Agreement” before making any investment decisions.