Special Purpose Vehicles can be used by women venture capitalists, angel groups to raise money from accredited investors to invest in startups. SPVs have lower fees, deals are quicker to do, and returns are distributed faster.
It should be noted that not all SPVs are investing in startups, though the lion's share is.
SPVs may also have a lower minimum-investment commitment."The median minimum investment is $10,000," said Jump. They are a more liquid investment than venture capital funds."It's typically 2.3 years to get the first distribution from an SPV and 10, maybe even 12 years, for a venture capital fund." The volatility of the public markets is making it harder for micro funds—those with assets of less than $50 million—to raise capital to close their fund or to raise their next fund. A fund that might have taken 18 months in the last few years may now take two or three years, commented Jump."SPVs are a great tool for emerging managers looking to establish a track record, grow overall AUM [assets under management], and develop relationships with limited partners," said Jump.
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