Use an SPV for a single known deal with a defined investor group. Use a fund for multiple investments over time with blind-pool capital. The deciding factor is deal frequency: if you plan to do more than 3 to 4 deals per year, a fund is usually more efficient because you raise capital once and deploy it across investments rather than raising separately for each deal.
SPVs are simpler and cheaper to form, but the overhead compounds when you stack multiple SPVs. Each one needs its own bank account, K-1s, compliance filings, and audit (if required by your LPs). Five SPVs in a year means five sets of everything. A single fund with five investments produces one set of fund-level reporting.
There is a middle ground. Some managers run a fund for their main strategy and use occasional SPVs for co-investments or off-strategy deals that fall outside the fund's mandate.
See Funds vs. SPVs for a detailed comparison.
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