Problem Due to exploding valuations of tech companies, many venture capital investors are priced out of venture deals and cannot exercise their pro rata rights to participate in hot financing rounds. A recent solution to this problem has been syndication, among existing VC fund limited partners and new investors, via special purpose vehicle (SPV) structures. The SPV is created for just one purpose: pooling capital and taking a direct stake in a company by participating in a specified financing at a specific point of time. Pooling the VC’s resources with funds from other investors, both from inside and outside of the fund, allows VCs to maintain control and expand its financial interest. However, SPVs also pose certain business and legal…

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