More From Green Room
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Competition for the best private companies has never been higher. As we've written previously, the investable box continues to shrink while the amount of capital chasing exceptional companies keeps growing. Being able to invest in a great business has become a competitive achievement in itself.
That competition is changing how the best early stage investment firms operate. The traditional model treated stages as separate worlds. Seed funds found companies, growth funds scaled them, and everyone stayed in their lane. That model is breaking down. Firms are becoming multi-stage investors, reserving capital to lean into their own winners rather than handing their best companies to the next fund in line. When you already have an insider partnership with a great business, your existing position is the most valuable source of access you have.
The insider SPV is the instrument that makes this work.
A Special Purpose Vehicle (SPV) is a single-asset investment entity. Instead of committing to a fund that will invest across multiple companies over several years, you invest in one company, in one financing round, with full knowledge of what you own before you invest.
An insider SPV adds one more element: the vehicle is organized by an existing investor in the company. The sponsor already sits on the cap table, already knows the management team, and has been working as a partner inside the business.
The edge isn't that the company is at a different stage. The edge is information, trust, and conviction earned through a long-term partnership with management.
An insider SPV is an extension of that conviction, not a substitute for early-stage investing. The early investment is what creates the knowledge. The SPV is what allows investors to continue investing behind it.
When we organize an insider SPV around one of our portfolio companies, we're not underwriting from just a set of data and assumptions. We're underwriting from firsthand experience working alongside the founders and watching the business evolve.
We'd summarize the appeal in three parts:
Underneath all three is the same advantage: information. An insider sponsor has in depth context on how management operates, how the product has evolved, and how the company performs against its own plans. Trust in the team and conviction in the performance outlook are earned over this partnership, and they are exactly the things an outside investor cannot buy their way into during a short initial diligence process.
Waste management is about as essential as industries get. Every home and business generates waste, and a large, fragmented base of independent operators handles the collection, processing, transfer, and recycling that keeps it moving. The market is economically stable, highly fragmented, and still runs largely on legacy software, spreadsheets, and phone calls. We estimate the software opportunity alone at roughly $4 billion, with another multi-billion-dollar opportunity emerging as AI transforms how these businesses operate.
Our portfolio company, TrashLab, is building a Vertical AI platform that serves as the operating system for independent waste management operators. The platform manages customers and orders, dispatches trucks and drivers, automates billing and collections, and provides the analytics operators need to run their businesses. AI is embedded throughout the product, from capturing customer calls and converting them into work orders to improving dispatch, collections, reporting, and driver workflows. We believe TrashLab has built one of the most AI-forward platforms in the waste management industry while remaining remarkably capital efficient.
We first invested in TrashLab's seed round in January 2024, backing CEO Neil Chaudhary, CTO John Tan, and a founding team with deep engineering and product experience from companies like Stripe and Google. Over the following two years, we were pleased with the team’s performance as the platform matured, customers expanded, and the business continued to execute.
That partnership gave us something an outside investor couldn't replicate.
We didn't learn about TrashLab through a diligence cycle or a data room. We watched the performance develop, the product evolve, customers adopt and renew, and management consistently execute over time. Our conviction was built through this experience.
So when TrashLab launched a highly competitive Series A financing, we were engaged in the process. We helped the team navigate the financing, participated through our fund, and organized an insider SPV so our LPs could increase their ownership alongside us. We invested our own capital alongside our LPs because we have a unique opportunity to invest in a really nice business.
The round was competitive for everyone else. For us, it was an opportunity to continue backing a team we've believed in since the beginning.
SPVs are not a replacement for fund commitments. Funds provide diversification, the earliest entry points, and a manager doing full-time work you don't have to do. SPVs concentrate the opportunity and the risk. If the company stumbles, there's no portfolio effect to absorb it.
They are not a substitute for early-stage investing either. The opposite is true: the early-stage position is what makes the insider vehicle possible. The firms doing this well are not abandoning seed and early growth. They are extending it, building ownership in their winners.
The pattern we see among sophisticated family offices and other investors is a core-and-satellite approach: fund commitments as the core, insider SPVs as satellites concentrating capital into the two or three companies per year where conviction is highest.
The fund commitment is what generates the SPV access. LPs in our funds see the portfolio develop quarter by quarter. When a portfolio company breaks out, those LPs already know the story, the team, and the numbers. The SPV lets them act on that knowledge with additional capital.
This is where early stage investing is today: multi-stage firms that lean into their winners, and LPs who invest alongside that accumulated conviction. Competition for great companies will keep intensifying. The durable advantage isn't simply finding great companies. It's having the conviction and opportunity to keep backing them as they grow.
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