Strategy 04 · Early-Stage Access
Structures and SPVs
One vehicle per deal, when the deal needs it.
Some early-stage allocations do not fit inside a commingled fund: a position that is too large for one fund’s concentration limit, an opportunity offered to investors who are not in the fund, or an instrument whose terms require a single named holder. Wesvel forms special purpose vehicles for these, a legal entity that holds one position, owned by the investors who chose it.
When an SPV is used
The allocation is larger than the fund should hold, and other investors want the excess. The issuer requires a single holder of record, or restricts transfers in a way a fund cannot accommodate. Investors want exposure to one specific deal without the rest of the venture book. Or the position needs to be held in a jurisdiction or a form the fund is not structured for.
How it is run
The SPV is a separate legal entity with its own bank and custody accounts, its own administrator and, where its size warrants, its own auditor. Wesvel acts as manager under a written agreement. The SPV holds one position, or a defined set, and does nothing else. Its investors receive reporting on that position and are entitled to its proceeds on realization, net of the vehicle’s costs and any fee described in its documents.
Governance and conflicts
Where the fund and an SPV hold the same position, allocation between them is made under a written policy before the deal closes, not after its outcome is known. Where the fund is also a trading counterparty of the portfolio company, that relationship is disclosed to SPV investors. Decisions about the position (voting, follow-on, exit) are made by Wesvel under the management agreement and reported.
Practice
How Wesvel approaches it
- 01Allocation between the fund and any SPV is fixed by written policy at commitment; the policy is disclosed to investors in both.
- 02Each SPV has its own segregated accounts, administrator and reporting; assets are never commingled with the fund’s or with another SPV’s.
- 03Fees and expenses of each SPV are set out in its own documents and charged only to that vehicle.
- 04Conflicts between SPV positions and the firm’s other activities are disclosed in writing at formation and on any material change.
More in Early-Stage Access
- SourcingWhere early-stage opportunities come from, and why proprietary access is the whole edge.
- DiligenceThe review an early-stage opportunity goes through before capital is committed.
- Valuation and Side PocketsHow locked and illiquid venture positions are valued, segregated and charged, so liquid investors are not exposed to them.