SPV formation has exploded. Carta reports a 116% increase in SPV creation over five years and a 198% jump in the 2021–2023 period compared to the prior three years. Sydecar SPVs raised $476 million in 2024 alone — more than double the previous year. The median SPV on Carta now holds $2.17 million in assets, up from $1.18 million in 2016. The single-deal vehicle has gone from a niche instrument to a core strategy for emerging managers.
But volume does not equal quality. LPs are becoming more sophisticated about how they evaluate SPV track records, and the gap between a track record that opens doors and one that gets politely declined is wider than most first-time managers realise.
The attribution trap
Here is the mistake that sinks more aspiring GPs than any other: investing in someone else's SPV and claiming it as your track record. If you participated in a syndicate led by another manager, you were an LP — not a GP demonstrating fund management skills. Sophisticated allocators see through this immediately.
A credible SPV track record requires that you sourced the deal yourself, led the diligence, structured the vehicle, raised the capital, and managed the investment post-close. Attribution letters from prior funds help, but the strongest signal is public evidence of your role: board seats, press announcements, founder references. If your only proof of involvement is that you wired money into someone else's deal, that is not a track record — that is a portfolio.
What LPs actually look for
The industry has shifted decisively toward distributions over paper gains. Roughly 60% of LPs now prioritise DPI (distributions to paid-in capital) over TVPI (total value to paid-in capital) when evaluating emerging managers. The 2020–2021 era saw many funds report sky-high TVPIs from unrealised mark-ups that later proved fragile. LPs learned that paper valuations can collapse. Cash returned does not.
This creates a genuine challenge for SPV managers. Your investments may not have exited yet, so you are presenting TVPI without DPI. The secondary market boom — $162 billion in secondary transactions in 2024, with VC secondary volume reaching $61 billion in the first half of 2025 — is becoming one solution, as managers use continuation vehicles and secondary sales to generate earlier liquidity events. But absent realisations, LPs evaluate other signals.
According to research from GoingVC and multiple institutional LP perspectives, the signals that matter most include: thesis consistency across your deals (not opportunistic scatter), the quality of your sourcing (inbound founder referrals are stronger than syndication participation), documented decision-making (formal investment memos and post-mortems), and founder references that validate specific operational support you provided. Repeatability matters more than any single outcome — LPs are underwriting your process, not your luckiest deal.
The economics you need to understand
SPV economics have standardised rapidly as platforms compete for emerging manager business. The median management fee across SPVs is 1.9%, though most SPVs charge no management fee at all — only 44% do. Among larger SPVs (over $10M AUM), the figure rises to 67%. Average carried interest on Sydecar runs at 12%, well below the traditional 20% benchmark, with a typical range of 15–25% depending on deal complexity and investor expectations.
Formation costs have dropped significantly with platform competition. A standard SPV on AngelList runs $8,000–$10,000 in setup and filing fees, with minimums around $80,000 in capital raised. Sydecar starts at roughly $4,500. The total cost envelope for a typical SPV — formation, administration, annual filings, K-1 preparation — runs $15,000–$25,000 per vehicle per year. This is manageable for a $2M vehicle, punishing for a $200K one.
The formation cost economics explain a market reality: the managers who use SPVs most effectively tend to run larger vehicles ($2M+) with a defined LP base, not micro-SPVs assembled ad hoc for each deal. Building a stable investor network that can deploy into your vehicles repeatedly is more important than maximising the number of deals.
Structural and regulatory considerations
Most US SPVs are structured as Delaware LLCs relying on Regulation D exemptions. The choice between Rule 506(b) and 506(c) has meaningful implications. 506(b) permits up to 35 non-accredited but sophisticated investors alongside unlimited accredited investors, but prohibits general solicitation. 506(c) allows general solicitation but restricts participation to accredited investors and requires formal verification of their status. New SEC guidance issued in March 2025 eased the verification burden for 506(c), making it a more viable option for managers who want to market broadly.
A critical regulatory deadline looms: effective January 2028, private fund managers must implement comprehensive AML/KYC programmes under new FinCEN rules. Managers who build institutional-grade compliance processes now — digital identity verification, ongoing monitoring, automated self-certification collection — will have a structural advantage when the deadline arrives. Managers who are still collecting scanned passports via email will face a painful catch-up.
Tax administration is another underestimated operational risk. SPVs file Form 1065 and issue K-1s to each investor annually. Late K-1 delivery — investors need them by March or April — erodes trust and generates a wave of anxious emails. Multi-state filing obligations create compliance complexity that compounds with each new investor jurisdiction.
The performance edge is real
There is a data-driven case for the SPV-to-fund pathway. A Colibri Institute analysis of roughly 2,500 VC funds from 2000 to 2024 found that emerging managers outperformed established managers across DPI, IRR, and TVPI. Makena Capital reported emerging managers achieving 250 basis points of outperformance across 1,100+ funds over 20 years. Preqin found emerging managers outperformed in 22 of 28 vintage years. PitchBook data shows that funds under $350M are 50% more likely to generate 2.5x returns than funds over $750M.
The thesis is intuitive: smaller, hungrier managers with concentrated portfolios and personal capital at risk tend to outperform larger managers deploying from institutional platforms. But capturing that edge requires surviving the fundraising gauntlet — and that is where operational quality separates the managers who raise Fund I from the ones who keep running SPVs indefinitely.
From SPVs to Fund I
The typical pathway, documented across SVB, Gen II, and multiple fund formation advisors: an emerging manager executes 20 or more SPV deals over roughly two years, builds a stable LP network, hones their diligence process, and then converts that base into a first fund. The transition is not seamless. First-time fundraises typically take 12–18 months, extending to 18–24 months in slower markets. Total commitments to first-time funds dropped to $26.7 billion in the first three quarters of 2024, the lowest in years.
What distinguishes managers who make the transition from those who do not is not just returns — it is whether their SPV operations demonstrated the repeatability and professionalism that LPs require at the fund level. Documented investment processes, clean audit trails, timely reporting, and professional investor communications are the operational proof points that convert SPV investors into Fund I LPs.
How Infra One supports this
Our SPV product is built for the emerging manager pathway — from first deal to Fund I. Digital investor onboarding with automated KYC/AML, capital call processing, K-1 coordination, investor reporting, and a secure data room. The same platform and team that runs your SPVs can scale to your first fund, so you never need to rebuild your operational infrastructure during the most critical phase of your fundraising journey.
If you are running SPVs and thinking about Fund I, book a call with our team.
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