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Frothy Privates & SPVs
Matt Ober
March 17, 2025
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Some of the later-stage privates are feeling frothy. Is this peak hype?
My inbox is starting to fill up with cold emails to get into OpenAI, Xai, Anthropic, and a dozen other AI and robotics companies. The kicker is that many of these have hefty one-time fees just to get into the deal. It must be nice to be offering access to these late stage companies and making millions up front off to investors. On top of that I am seeing SPV’s into SPV’s. That’s right, and SPV^ 2. I remember from my time working at Bloomberg and in the hedge fund industry when people were actively investing in CDO’s and then there were CDO^ 2. But to see investors actively paying fees into an SPV that invests into an SPV is wild.
My worry is I bet many investors don’t realize they are paying fees on top of fees. Additionally, they probably don’t realize they can’t easily secondary out of these positions, especially if it is an SPV into an SPV. But hey, maybe these work out, and all these companies go public at higher valuations than the entry points! For me, I am more comfortable investing at the seed stage in sub $10m valuation companies where my team at SocialLeverage can be hands-on and, at those valuations, can see huge returns for LPs without having to be the next IPO Decacorn.
Cheers to the IPO market opening up hopefully in late 2025!
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