Allocation
The portion of funds designated to a specific investor or Special Purpose Vehicle (SPV) for investment in a private asset. An allocation typically represents a subset of a larger total amount. For example, SPV 1 received an allocation of $1 million from the company’s $10 million fundraising.
AML (Anti-Money Laundering)
A set of laws, regulations, and procedures aimed at preventing the generation of income through illegal activities. Financial institutions are required to implement policies and conduct due diligence to verify the source of a customer’s wealth and funds, and to assess and manage the risk of being involved in money laundering.
Angel (Angel Investor)
An individual or entity that invests funds in early-stage startups or entrepreneurs, typically in exchange for equity ownership. Angel investors may invest independently or collectively through an SPV (Special Purpose Vehicle), where multiple investors pool their resources for a larger investment. While angel investors can include family members and friends, they are more commonly high-net-worth […]
Arbitration
A method of resolving legal disputes outside of the court system, where an impartial third party, known as an arbitrator, reviews the case and makes a binding decision. In the context of an SPV, arbitration is used as an alternative to litigation for settling disagreements.
Arbitration Location
The designated place where arbitration proceedings will take place in the event of a dispute involving the SPV. The location must be within the United States; it is recommended that the location be in Delaware, or the same city and state that the Organizer resides.
Asset
Any item or resource with monetary value. In the context of private equity financing, an asset typically refers to a financial asset, representing an investment in the securities or assets of other entities. SPVs generally hold ownership interests or rights to ownership in various types of assets, including startup companies, real estate, investment funds, crypto-assets, […]
Asset Class
A distinct category of assets within a single legal structure, where investor funds are allocated to a specific asset rather than pooled across multiple assets. Each asset class represents separate legal rights associated with a particular asset. Examples of asset classes include startup companies, secondaries, real estate, royalties, and collectibles.
Blockchain
A distributed digital ledger that records transactions made in cryptocurrencies, such as Bitcoin, in a chronological and publicly accessible manner. Each transaction is verified and added to a chain of blocks, ensuring transparency and security.
Blue Sky
Blue Sky laws are State laws that mandate issuers to provide notice and, in some cases, pay fees to the states in which investors reside. These laws serve as an additional regulatory framework to complement federal securities regulations. For example, when an SPV raises capital from investors in multiple states, such as California, Utah, and […]
Board (Board of Directors, B of D, BoD)
A group of individuals elected by shareholders to represent their interests and oversee corporate governance. The board is responsible for establishing policies related to corporate management and making key decisions on major company matters. Acting as fiduciaries, board members are tasked with ensuring the financial well-being of the company. Responsibilities may include hiring and firing […]
Cap Table
A spreadsheet or table that details the ownership structure of a company, commonly used by portfolio companies or early-stage ventures. It lists the various equity interests, including common shares, preferred shares, options, promissory notes, warrants, SAFEs, and other securities, along with the prices paid by each holder. The table presents ownership on both an actual […]
Capital Account Statement
A document that details an investor’s capital contribution, their percentage ownership in the SPV, and the underlying assets of the SPV.
Capital Call
A request made by an SPV for additional capital from investors when the funds initially collected are insufficient to meet the obligations outlined in the asset acquisition or purchase document. If the required additional capital exceeds the current available funds but is still within the total subscribed capital, the SPV issues a capital call to […]
Carry (Carried Interest, Profits Interest)
A performance-based fee paid to the Organizer and other designated third parties as specified in the Operating Agreement, calculated as the net proceeds received by an SPV upon a liquidity event, minus the initial investment. Carry is typically paid after investors have received a return on their investment. Note: Under the Tax Cuts and Jobs […]
CEO (Chief Executive Officer)
The highest-ranking executive in a company, responsible for developing and executing high-level strategies, making major corporate decisions, overseeing overall operations and resources, and serving as the primary liaison between the board of directors and corporate operations. The CEO typically holds a position on the board of directors and, in some cases, may also serve as […]