An SPV is a legal entity (typically an LLC) with its own bank account and operating agreement.
Here's the step-by-step lifecycle of an SPV on Wealt:
Creation: When Wealt lists a new deal, a dedicated SPV is created specifically for that investment.
Fundraising: Investors indicate interest → sign subscription agreements → wire funds to the SPV's bank account. The SPV collects all investor capital during the deal's open period.
Investment: Once the SPV reaches its target raise, the pooled capital is invested into the company. The SPV appears as a single investor on the company's cap table.
Holding period: The SPV holds the shares on behalf of all investors. During this period:
Wealt provides quarterly updates (if available from the company)
Valuations are updated periodically
K-1 tax forms are issued annually
Your portfolio reflects the current estimated value
Exit: When the company has a liquidity event (IPO, acquisition, secondary):
Proceeds flow to the SPV
The SPV distributes to each investor proportionally (based on ownership)
Carry (performance fee) and exit fees are deducted at this stage
Remaining proceeds are wired to your bank account
Wind-down: After all proceeds are distributed, the SPV is dissolved, and final tax documents are issued.