Sub Doc (Subscription Document, Subscription Agreement)
A subscription agreement (Sub Docs) is an application by an investor to join an SPV (LLC or LP), and it is also used to sell stock shares in a private company. All SPV investors need to be accepted by the SPV Organizer. The investor candidate fills out a form documenting the investor’s suitability for the […]
Subscription Amount
The subscription amount is the minimum monetary commitment that the Organizer is requesting from the investors in order to participate in the deal. Most SPVs have a minimum subscription amount that is set by the Organizer and can be adjusted from time to time by the Organizer.
Syndicate
Syndicate is another name for SPV. See SPV.
Syndicator
Syndicator is another name for Organizer. See Organizer.
Takeover (Takeon, SPV Takeover)
A takeover of the administrative, windup and post close activities of an existing SPV or fund which has already closed.
Tax Extension
Every tax form has a required file date but the IRS allows for extensions to this file date. Filing a tax extension changes the file date giving additional time for preparation and filing of a tax form. SPVs file a partnership return of IRS form 1065. The required date is by March 15th of each […]
Taxable Event
Any event or transaction that results in a tax consequence for the party who executes the transaction is considered a taxable event. Common examples of taxable events for an SPV include receiving interest and dividends, selling securities for a gain, and exercising options. Unrealized gains on an investment do not qualify as a taxable event. […]
TIN (EIN)
Taxpayer Identification Number (TIN) and Employer Identification Number (EIN) are defined as a nine-digit number that the IRS assigns to organizations. The IRS uses the number to identify taxpayers who are required to file various business tax returns. TIN/EIN are used by SPVs (Traditional LLCs and Series LLCs) to file tax returns and obtain a […]
Title III (Regulation Crowdfunding/Reg CF)
Crowdfunding regulation instituted as part of the JOBS Act. Title III allows issuers to raise funds online from non-accredited individuals for investment purposes. Issuers of securities in a Title III offering must meet various requirements. See Reg CF.
Traditional LLC/LP (Regular LLC/LP)
Before the Master Series LLC/LP structure was codified there was only LLC or LP. Now, because the Master Series structure can cause confusion, we need to distinguish between the two and the typical words to describe the original LLC/LP structure is “regular” or “traditional” (or the “OG!”). A traditional LLC/LP structure typically requires a filing […]
Valuation
Valuation is the process of determining the current worth of an asset or a company. There are many techniques used to determine value. The market value of a security is determined by what a buyer is willing to pay a seller, assuming both parties enter the transaction willingly. SPVs are used to invest into private […]
Valuation Cap
A “valuation cap” entitles note holders to convert the outstanding balance on the note into shares of stock at the lower of (i) the valuation cap or (ii) the price per share in a qualified financing. Valuation cap’s are used in cases of a convertible debt and SAFE rounds that allows Investors to invest into […]
VC (Venture Capital or Venture Capitalist)
Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. For startups without access to capital markets, venture capital is an essential source of money. Risk is typically high for investors, but the downside for the startup is that these venture capitalists usually get […]
VC Fund (Venture Capital Fund)
An investment fund that manages the money of investors who seek private equity interest in startup and small-to medium-sized enterprises with strong growth potential. Investment is used specifically to fund growth in the Series A round of funding. Venture capital funds use a structured vehicle structure very similar to an SPV. In fact, an SPV […]
Venture Capital Fund (ERA)
For ERA (and other) regulatory purposes, the SEC has defined a Venture Capital Fund as: A private fund that meets the following qualifications: Pursues a venture capital strategy; Fund has no more than 20% of the fund’s total assets (including committed but not yet invested capital) in assets that are not “qualifying investments” or “short […]