An SPV (Special Purpose Vehicle) is a legal entity — typically an LLC — created to pool investor capital for a single investment. In venture capital, SPVs are used to co-invest alongside a fund in a specific company, give investors access to a deal they couldn't invest in directly, or allow a GP to offer LP-like access to a single company. SPVs are common on AngelList, Carta, and through syndicate leads. They have separate economics (fees and carry) from the underlying fund, if applicable.

SPV fees typically include: a one-time setup fee ($5K–$25K depending on complexity and platform), an annual admin fee ($1.5K–$10K), optional management fee (0–2% of committed capital annually), and carry (10–20% of profits above the investor's principal). The carry is calculated on the net profit — if you invest $100K in an SPV that exits at $300K (3x), the profit is $200K. At 20% carry, the GP takes $40K and you receive $260K total ($160K profit net of carry).

Fee stacking occurs when an investor participates in an SPV that itself invests through another fund or SPV, resulting in multiple layers of fees and carry. Example: GP charges 2%/20% carry to access a VC fund that itself charges 2%/20%. On a 10x gross return, the investor might net only 6–7x after both fee layers. To avoid fee stacking, always ask: 'How many layers of economics are between me and the company?' and 'Does the SPV lead have direct allocation or is it sub-allocated from another fund?'

SPVs are better when you have a specific high-conviction view on a single company and you want concentrated exposure. VC funds are better when you want diversification, professional portfolio management, and ongoing deal flow across many companies. For most early-stage investors, a diversified portfolio of 20–30+ companies is more likely to generate venture returns than a concentrated SPV strategy. SPVs are best used to increase exposure to a company you already hold or have very high conviction on — not as a primary investment strategy.