A snippet from the article:
Investors are also beginning to use SPVs to trade and share pro rata privileges. Some early-stage funds, for example, are now allowing larger venture firms to invest in their portfolio companies’ later financing rounds through SPVs, creating a new way for those firms to get access to up-and-coming startups, said Winter Mead, co-founder of Oper8r, which runs a training program for people seeking to raise venture funds.
Rather than invest in startups directly, growth equity firm Alpha Partners makes money for its limited partners by creating SPVs to help venture funds make their pro rata investments. Alpha charges its limited partners a performance fee that it splits with the venture funds. In recent years, the firm has made investments on behalf of early investors in companies including online education startups Coursera and Udemy, as well as Wish and Coupang, two shopping apps that have recently gone public.
Alpha Partners estimates that 76% of the earliest investors in startups worth more than $1 billion are small or specialist venture capitalists with less than $100 million under management, and only 5% of them have the capital necessary to continue investing in later rounds.
“The reality is we’ve not even scratched the surface yet,” said Steve Brotman, a managing partner at the firm. “We’re at the very beginning of this boom.
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