- The SPV treadmill is the repetitive process of creating and administering a separate investment vehicle for every new deal, and the workload compounds with deal volume
- Avestor's Customizable Fund uses one master entity while preserving investor choice at the individual deal level
- Investors typically receive one consolidated K1 regardless of how many deals they participate in inside the fund
- SPVs remain appropriate for isolated transactions, the challenge is specifically repetition at scale, not the SPV structure itself
- Avestor combines fund formation, investor management, and administration in one platform, per Avestor's About page
For syndicators and emerging fund managers, the traditional deal-by-deal SPV model can become increasingly difficult to manage as investment activity grows. Every new transaction may require another entity, offering documents, investor onboarding process, accounting workflow, and tax reporting structure, often called the SPV treadmill. Avestor's Customizable Fund is designed around an alternative, allowing investors to select specific investments within a continuously offered fund structure.
What Is the SPV Treadmill?
An SPV treadmill describes the repetitive process of creating a separate special purpose vehicle for each investment or transaction, new deal, new LLC, new offering documents, new investor onboarding, new accounting, new reporting, new tax documents, then the process starts again for the next deal. For a sponsor completing one or two transactions per year, this may be manageable, but an operator completing five, ten, or more transactions can quickly accumulate multiple entities and administrative workflows, resulting in operational fragmentation.
Why Deal-by-Deal SPVs Become Difficult to Scale
The SPV model itself isn't inherently problematic, SPVs can be useful when investors need exposure to a specific asset or transaction. The challenge is repetition. A sponsor completing eight investments and creating eight SPVs means investors participating in multiple deals may have multiple investment entities, subscription documents, capital accounts, reports, and tax documents. For the sponsor, the administrative workload grows alongside deal volume, and for investors, the experience becomes fragmented, navigating several separate investments instead of managing one relationship with one fund.
What Is Avestor's Customizable Fund?
Avestor's Customizable Fund is designed to provide a continuously offered fund structure that allows investors to select specific investments. Rather than establishing a new SPV for every transaction, the sponsor operates through one fund structure. Traditional SPV model: one deal, one investment vehicle. Customizable Fund model: one fund, multiple investment opportunities, investors select the deals they want. This preserves an important feature of syndications, investor choice, an investor doesn't necessarily have to participate in every deal offered by the manager.
How the Customizable Fund Works
The basic process can be divided into five stages.
- 1. Establish the FundThe manager establishes the appropriate fund structure and completes the required formation and offering documentation.
- 2. Onboard InvestorsInvestors complete onboarding and required verification processes through the platform.
- 3. Present Investment OpportunitiesThe manager identifies and presents eligible investment opportunities to investors.
- 4. Investors Select DealsInvestors choose which opportunities they want to participate in, subject to the fund's governing documents and applicable offering terms.
- 5. Manage Investments Through One InfrastructureInstead of creating an entirely new operational workflow for each investment, the manager uses the same fund administration and investor management infrastructure for onboarding, capital collection, allocation, capital calls, distributions, and reporting.
SPV Treadmill vs Customizable Fund
| Feature | Deal-by-Deal SPVs | Avestor Customizable Fund |
|---|---|---|
| Investment structure | Separate vehicle for each deal | One continuously offered fund |
| New entity for each deal | Typically yes | Designed to avoid this repetition |
| Investor choice | Deal-specific | Investors select applicable investments |
| Investor onboarding | Repeated for each vehicle | Centralized infrastructure |
| Administration | Fragmented across vehicles | Centralized |
| Reporting | Separate by vehicle | Consolidated fund infrastructure |
| Scalability | Becomes more complex with volume | Designed for recurring activity |
The appropriate structure ultimately depends on the investment strategy, legal requirements, investor expectations, and advice from qualified legal and tax professionals.
Who Benefits Most From an SPV Treadmill Alternative?
Real Estate Syndicators
Real estate sponsors frequently evaluate multiple acquisitions throughout the year across multifamily, industrial, hospitality, self-storage, mixed-use, and senior housing. Instead of creating a new structure every time, a continuous fund model provides centralized infrastructure for recurring opportunities.
Private Debt and Lending Managers
The structure can also be relevant for private lending businesses, where a lender originates loans continuously rather than making one investment and waiting several years for an exit. A continuously offered structure can be useful for hard money lending, mortgage lending, fix-and-flip loans, small business lending, private credit, and trade finance, where capital can potentially be deployed, returned, and redeployed across a revolving investment portfolio.
Emerging Fund Managers
First-time and emerging fund managers can face significant operational complexity, they may have strong investment expertise but lack the internal infrastructure of a large institutional manager. A platform that combines fund formation, investor management, administration, reporting, and technology can help reduce the number of separate systems and vendors they need to coordinate.
What Does Avestor Provide?
Avestor combines fund infrastructure with investor management and administration capabilities. Depending on the selected structure and plan, the platform supports fund formation, investor onboarding, KYC and AML workflows, accreditation processes, electronic document signing, capital calls, distributions, fund accounting, investor reporting, document management, an investor portal, and tax reporting workflows. Replacing the SPV treadmill isn't simply a matter of changing the legal entity, a sponsor also needs a way to manage everything that happens after the investment vehicle exists.
The Investor Experience Matters Too
The SPV treadmill affects investors as much as it affects fund managers. An investor participating in multiple SPVs can end up with multiple subscription agreements, multiple investment entities, multiple reporting streams, multiple tax documents, and multiple investor portals or login experiences. A centralized fund infrastructure creates a more consistent investor experience, with investors accessing their investment information through a dedicated investor portal while managers handle fundraising and administration through the same underlying infrastructure.
When Does It Make Sense to Move Beyond SPVs?
There isn't a universal number of deals at which every sponsor should move from SPVs to a fund, but several warning signs suggest the traditional model may be becoming inefficient, launching several deals every year, the same investors participating repeatedly, increasing legal costs with every transaction, significant team time spent managing documents, investor reporting spread across multiple entities, and difficulty coordinating tax reporting. At that point, it may be worth evaluating whether a centralized fund structure is more appropriate.
Why Avestor Can Be an Alternative to the SPV Treadmill
The biggest potential advantage isn't simply fewer entities, it is operational continuity. Instead of rebuilding the fundraising and administration process every time a new investment appears, a manager can establish infrastructure designed for recurring investment activity. Avestor's platform has supported a growing base of deployed capital across a large number of companies and investments, a track record that continues to expand as more sponsors adopt the model, though specific figures should be confirmed directly with Avestor and evaluated alongside the fund structure and services being considered.
Authoritative Resources
Related Avestor Resources
Frequently Asked Questions
Key Takeaways
- The SPV treadmill becomes a problem when a successful investment strategy generates more deals than the sponsor's operational infrastructure can comfortably support.
- Creating a new entity for every transaction provides flexibility and deal level isolation, but also creates repetitive legal, accounting, tax, and investor management work.
- Avestor's Customizable Fund offers an alternative, establish one continuously offered fund infrastructure and let investors select the opportunities that fit their objectives.
- For syndicators, private lenders, and emerging fund managers with recurring deal flow, this can create a more scalable way to manage capital raising and fund operations.
- The right question isn't simply "should I use an SPV," it's whether creating a new SPV for every investment is still the most efficient way to operate at current deal volume, per Avestor's About page.