How do setup costs work for syndicate SPVs?

Setup costs cover the expenses to form and operate the SPV for its life (record-keeping, tax reporting, admin support, etc.).

Setup costs are paid by the SPV when the SPV closes and before the SPV invests into its target portfolio company.

Investors indirectly pay a pro rata portion of the admin costs by virtue of their interest in the SPV. Note that setup costs do not include state regulatory fees, which are variable and paid to state security regulators to cover the cost of the required notice filings. Learn more.

Example:

  • SPV is investing into Startup A and raises $200k from investors
  • $8k is paid as admin costs to cover the administration of the SPV for its life
  • $1k is paid to cover state regulatory fees (median cost on AngelList)
  • $191,000 will be invested into Startup A
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