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Special Purpose Vehicle
Every time Brightspark invests in a new company, we create a new Special Purpose Vehicle (SPV) Limited Partnership Fund that is open to accredited investors.
SPV Fund: The fund, structured as a Special Purpose Vehicle, invests capital in a portfolio company. In return, it owns securities (usually preferred shares) of the company. Every fund has a unique name corresponding to the name of the target company.
Company: The company in which the Brightspark fund will invest the capital. See examples of past investments
Limited Partners: The investors in the fund (accredited investors, family offices, small institutions)
Units in the Fund: Every dollar you invest gives you one unit of the fund, and your number of units determines the percentage of your ownership of the fund.
Securities: In exchange for capital, companies provide securities to the Fund. In our case, securities usually take the form of preferred shares in the company, and occasionally convertible debentures.
Management fees and carry
A small portion of a Limited Partner's investment is applied to fees:
A management fee (varies, but usually 1.5 to 2% per year for the first three years) goes to Brightspark and is used as compensation for sitting on sitting on boards of directors, due diligence, legal paperwork and overhead.
A one-time admin reserve fee (varies, but usually 2.5%-4% of the investment) covers external out-of-pocket fund expenses such as legal fees, tax and accounting costs.
When there is an exit, Brightspark first returns your contributed capital, and most of the returns are distributed amongst Limited Partners – a percentage (usually 15%) goes to Brightspark as a performance fee, or “carry”.
Monetizing your investment
As an investor, you make money when (and if) a company in your investment portfolio goes through a liquidation event. You will then receive your initial investment back as well as your allocated portion of the profit.
You should know that:
- Usually, a liquidation event takes the form of an acquisition or an IPO
- The average time before a company exits is 5-7 years, but this varies
- A successful sale through the Secondary Transaction Program is not guaranteed.
- VC investments are very risky, and you could lose your entire investment. Read our detailed risk disclaimer
We're here to help
If you have any questions about investing with us, our team is always available to help. You can reach us at firstname.lastname@example.org or schedule an introductory call with our team below: