SPV Structure & Investor Rights

A Special Purpose Vehicle (SPV) is a legal entity — typically structured as a Limited Liability Company (LLC) — created for the specific purpose of acquiring and holding shares of a private company. The SPV pools capital from multiple investors to purchase a single block of shares, which it then holds on behalf of its investors.

SPVs are a widely used and established structure in private market investing. They are commonly employed by venture capital funds, family offices, and institutional investors to facilitate investments in pre-IPO companies.

When you place a trade on Better Markets, the following structure applies:

• 1You invest in the SPV. Your purchase constitutes a co-investment in a Better Markets SPV. You receive an economic interest (membership interest) in the SPV proportional to your investment.
• 2The SPV holds the shares. The SPV is the legal owner of the underlying company shares on the company's cap table. The shares are held in the name of the SPV, not in your name individually.
• 3You have economic rights. As an investor in the SPV, you are entitled to your pro-rata share of any economic benefits, including dividends, distributions, and proceeds from a sale or IPO of the underlying company.
• 4Trading on the platform. You can buy and sell your economic interest in the SPV on Better Markets. When you sell, you transfer your economic interest to another investor — the underlying shares remain in the SPV.

Each SPV is governed by an operating agreement that sets out the rights and obligations of all parties. Key governance provisions include:

• Manager: Better Markets (or its designated affiliate) serves as the manager of each SPV, responsible for administrative decisions, custody of shares, and execution of liquidity events.
• Economic Rights: Investors receive pro-rata economic interests. In the event of an IPO, acquisition, or secondary sale of the underlying shares, proceeds are distributed to investors proportionally.
• Transferability: Your economic interest in the SPV is transferable on the Better Markets platform, subject to the terms of the operating agreement and applicable securities laws.
• Reporting: Better Markets provides regular updates on the SPV's holdings, including valuation changes and material events affecting the underlying company.

When the underlying company undergoes a liquidity event (such as an IPO, direct listing, or acquisition), the SPV manager will take appropriate steps to realize the value of the SPV's holdings. Proceeds will be distributed to investors in proportion to their economic interests, after deducting any applicable fees or expenses as described in the operating agreement.

In the case of an IPO, the SPV may distribute the publicly traded shares directly to investors or sell the shares and distribute cash proceeds, depending on what is most favorable and practical for investors.

Better Markets also offers perpetual contracts ("perps") that allow you to gain leveraged exposure to the price movement of shares held in an SPV. Perpetual contracts are synthetic derivative instruments — they do not represent ownership of SPV interests or direct stock.

Perpetual contracts carry additional risks including liquidation risk, funding rate costs, and the potential for losses exceeding your initial margin. Please trade responsibly and only with capital you can afford to lose.

Investing in SPV interests involves significant risks, including but not limited to:

• Illiquidity Risk: While Better Markets provides a platform for trading, there is no guarantee of liquidity. You may not be able to sell your interest at any given time or at a favorable price.
• Valuation Risk: Pre-IPO companies are valued based on estimates and secondary market data. These valuations may not reflect the actual value realized in a liquidity event.
• Loss of Capital: You may lose some or all of your investment. Pre-IPO investments are inherently speculative.
• No Guaranteed Returns: Past performance is not indicative of future results. There is no guarantee that any investment will achieve its objectives.
• Structural Risk: As an SPV investor, you are subject to the actions and decisions of the SPV manager. Conflicts of interest may arise.

If you have any questions about the SPV structure, your rights as an investor, or any other legal matters, please contact us at legal@bettermarkets.app.