You do not need a crystal ball to see it: the old playbook for venture capital is breaking.
Across the early-stage landscape, the structural foundations that once defined startup investing—short timelines, predictable exits, and plentiful LP capital—are starting to crack.
And in that widening gap, a new tool is rising: special purpose vehicles, or SPVs. These tools, once looked at with skepticism, are evolving into a central strategy for emerging fund managers, operators, and founders alike.
According to Shriram Bhashyam, COO of Sydecar, the structural timeline and requirements for going public have changed dramatically over the past decade. “The bar to go public for a venture-backed company has gotten higher. From 2010 to 2018, the median revenue for a venture-backed software company going public was $90 million. Since 2018, that number is closer to $190 million,” he explained.
“It’s not just revenues. It’s also growth rate, pathway to profitability, and valuation. Very few companies can meet today’s bar. We’ve also seen the timeline to IPO expand as well. During the first internet boom, a company would take about four years to go public. By 2013, that number was 7.5 years. Today, it’s more like 10 to 12 years.”
That extension is as much a timing issue as a liquidityy one. “The higher bar and expanded timeline to go public has put pressure on liquidity—for founders, employees, and early investors. As a result, we’ve seen these stakeholders increasingly turn to the private secondary markets as a pressure valve,” Bhashyam added.
That pressure valve is no longer theoretical. It is driving real behavioral shifts across the venture ecosystem.
How SPVs in Venture Capital Are Powering the Next Generation of Fund Managers
For years, the standard path for emerging venture capitalists was to raise a Fund I, convince institutional LPs to take a bet, and wait years for potential returns. But that road has gotten steeper. Emerging managers today face a record-low fundraising environment, where even strong performers struggle to raise capital.
Enter the SPV. Rather than waiting to close a fund, managers are now going deal-by-deal. SPVs allow them to showcase judgment, generate returns, and build relationships with LPs who prefer optionality over long-term lockups. It is not just a stopgap. It is a proving ground.
This approach mirrors what Vanguard did for public markets: remove friction, reduce cost, and expand access. With platforms like Sydecar handling logistics, it is easier than ever to syndicate a deal, track performance, and build credibility without a multimillion-dollar fund behind you.
Liquidity Crunch = Strategy Shift
The IPO drought is not just changing how managers raise. It is transforming how they invest.
When capital is locked up for over a decade, GPs cannot afford to think only in terms of binary outcomes. Liquidity needs are real. Founders are aging into new life stages. Employees want to buy homes. LPs expect distributions within a reasonable timeframe.
Many managers are beginning to adopt a new model. Instead of chasing large ownership at inflated valuations, they are placing smaller checks—often under $250,000—into high-upside pre-seed and seed rounds. The goal is not to hold until IPO. Instead, they plan to exit earlier through secondary transactions, often at the Series A or B stage.
It is a more dynamic model. And in this environment, it might be a smarter one.
What SPVs in Venture Capital Teach Us About Discipline
SPVs are not just financial structures. They are behavioral nudges.
Writing smaller checks encourages more scrutiny. It forces investors to focus on capital efficiency and realistic milestones. Founders raising from SPVs are less likely to be handed $3 million out of the gate. Instead, they are nudged toward proving traction first—then raising bigger rounds with more leverage.
This change is healthy. Many of the best startup stories begin with small, scrappy beginnings. Today’s founders can leverage tools like Webflow, Substack, Notion, and Instagram to build, test, and scale with minimal spend. Gone are the days when you needed a seven-figure seed round to validate an idea. Now, what you need is focus.
A Structural Shift, Not a Temporary Hack
The rise of SPVs in venture capital is not a temporary workaround. It is the foundation of a new approach.
Emerging managers are proving they can generate returns, earn trust, and build community without a flagship fund. Founders are using secondaries to reward early supporters and extend runway. And LPs are backing managers they believe in, one deal at a time.
This is not a bubble, or a trend, or a hack. It is a pivot. And like all great pivots in tech and finance, it first starts as a whisper, before eventually becoming an undeniable boom.
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