Special Purpose Vehicles (SPV)
What is an SPV?
When you invest in an SPV, you're not directly buying shares in a company or asset—you're buying a membership interest in a legal entity that owns those assets on behalf of all its investors. Think of it like buying into an investment club that exists solely to own one specific thing, whether that's shares in a startup, real estate, or in our case, revenue streams from artists.
For example, here's what actually happens with your money: You wire funds to the SPV's bank account, and in return you receive membership units representing your percentage ownership of that vehicle. If you invest $10,000 into a $1 million SPV, you own 1% of the SPV, which means you're entitled to 1% of whatever money that SPV receives (after expenses). You're not a direct shareholder in the underlying asset—the SPV is. You're a shareholder in the SPV itself.
In the context of artist investments, this means when revenue flows from any source the artist has assigned to the SPV—streaming royalties, tour income, merchandise sales, or even business ventures—that money goes to the SPV (not to you directly), and the SPV then distributes it to all investors proportionally. The SPV acts as a collection and distribution mechanism, handling all the complex administration so you just receive your share of the proceeds.
Why SPVs matter for artist investors
What you actually own
When you invest in an artist SPV, you're purchasing economic rights to any and all revenue streams the artist decides to assign to the vehicle. This is a crucial distinction—artists have complete flexibility in what they include, creating unique investment opportunities that go far beyond traditional music royalties:
Music revenues: Streaming royalties from Spotify and Apple Music, download sales, radio airplay, sync licenses for TV and film, and publishing royalties when songs are covered or played publicly.
Live performance income: Tour revenues, festival appearances, VIP meet-and-greet packages, and even virtual concert income. If an artist assigns 20% of their tour gross to the SPV, investors participate in every show they play.
Merchandise and products: Sales from t-shirts, vinyl, limited edition items, and any products bearing the artist's brand. Some artists include their entire merchandise business in their SPV offerings.
Business ventures: This is where it gets interesting—artists today are entrepreneurs. If they launch a clothing line, beverage brand, NFT collection, or tech startup, they can assign portions of these revenues to the SPV. You might invest in a rapper's music and end up owning a piece of their headphone company or restaurant chain.
Brand partnerships and endorsements: Sponsorship deals, brand ambassadorships, and advertising revenues. When an artist partners with Nike or appears in commercials, that income could flow to SPV investors.
The key is that artists control what goes into the SPV. They might include everything they earn for complete alignment with investors, or carefully select specific revenue streams. Your investment agreement will detail exactly which revenues are included, and artists can potentially add new revenue streams to existing SPVs as their careers evolve.
Simplified investment process
Without an SPV, participating in an artist's diverse revenue streams would be impossibly complex—you'd need separate agreements for music rights, touring participation, business investments, and merchandise deals. SPVs consolidate everything into one investment vehicle with one set of documents and one tax form (K-1).
For artists, SPVs provide a clean way to share their success with supporters without the administrative nightmare of managing hundreds of individual partnerships across multiple revenue streams.
How artist SPVs are structured
Legal entity formation
Most SPVs are structured as Limited Liability Companies (LLCs) or Limited Partnerships (LPs), chosen for their flexibility and pass-through taxation. The structure typically includes:
The General Partner (GP) or Manager: This entity handles all operational aspects including revenue collection from various sources, distribution to investors, and investor communications. For artist SPVs, the GP needs expertise across music, touring, merchandise, and business operations.
Limited Partners (LPs) or Members: These are the investors who contribute capital but have limited liability and no management responsibilities. They receive their proportional share of all revenues flowing through the SPV.
The SPV is formed in investor-friendly jurisdictions—Delaware is most common for its well-developed business law and efficiency. The flexibility of the structure allows artists to add or modify revenue streams as their careers develop.
Revenue flow mechanics
Artist SPVs are uniquely structured to capture and distribute diverse, ongoing revenue streams rather than waiting for a single exit event. Here's how it typically works:
Multi-source revenue collection: The SPV receives income from numerous sources—streaming platforms, tour promoters, merchandise companies, business ventures, and brand partners. Each revenue stream might have different payment schedules and structures.
Unified distribution: Despite the complexity of incoming revenues, distributions to investors are simple—you receive your percentage of all net revenues collected, regardless of source. Hypothetically, if the SPV collects $100,000 in a quarter from combined streaming, touring, and business income, a 1% owner receives $1,000. (Dividend structure on the Mars platform is being determined.
Rights and revenue assignment: The artist formally assigns specific rights or revenue percentages to the SPV through legal agreements. This might be 50% of all streaming royalties, 20% of gross tour revenues, 100% of merchandise profits, and 30% of any business ventures. The mix is entirely customizable based on what the artist wants to share.
The inverse of revenue flow is also worth noting: if revenue streams dry up across the board, shares of the SPV receiving said revenues may no longer hold the same value they once did. This is the risk of such an investment.
Types of artist SPVs
Comprehensive career SPVs
These SPVs can give investors broad exposure to an artist's entire economic ecosystem. The artist might assign percentages of all current and future revenue streams to the SPV, creating true alignment between artist success and investor returns.
When you invest in a comprehensive SPV, you're betting on the artist as an entrepreneur and brand, not just their music. If they pivot from music to launching a fashion line, you may benefit if the SPV has rights to the revenue of that enterprise. If they build a media company or restaurant empire, you participate. You're essentially investing in all of the artist, some might consider it as "Artist, Inc."
Hybrid revenue SPVs
Many SPVs combine traditional music revenues with select business ventures. An artist might include their streaming royalties and touring income, plus their equity in specific businesses they're launching. This may provide stable cash flow from music plus upside from entrepreneurial ventures.
These structures recognize that modern artists are multi-faceted creators. A DJ might include music royalties plus their festival brand. A rapper might combine streaming income with their cannabis company revenues. The combinations reflect each artist's unique career path.
Project-specific SPVs
Some SPVs focus on specific projects or time periods while still capturing diverse revenues. An artist might create an SPV for their next album cycle, including all revenues generated from that album—streaming, touring the album, merchandise, and any businesses launched during that era.
This gives investors concentrated exposure to what the artist believes will be their breakthrough moment while still participating in multiple revenue streams generated by that project.
Benefits for investors
Complete economic alignment
When artists include all their revenue streams in an SPV, it creates unprecedented alignment. Every stream, every ticket sold, every merchandise item, every business deal potentially benefits investors. The artist can't succeed without their investors succeeding proportionally.
This holistic participation means you're not worried about artists focusing on ventures that don't benefit you. If they become more of a brand than a musician, your investment captures that evolution.
Diversification within a single investment
A single artist SPV can provide exposure to multiple industries—entertainment, fashion, technology, consumer goods, and more. This internal diversification reduces risk compared to pure music royalty investments. If streaming revenues decline but the artist's tequila brand takes off, your investment potentially remains strong.
Modern artists often have 5-10 distinct revenue streams.
Upside beyond traditional royalties
While music royalties can provide steady cash flow, artist businesses can generate venture-style returns. By including business ventures in SPVs, artists share this entrepreneurial upside with investors.
Considerations and risks
Revenue complexity and unpredictability
With diverse revenue streams comes complexity. Different sources have varying:
- Payment schedules (daily streaming, monthly tours, quarterly business distributions)
- Growth trajectories (mature catalog royalties vs. startup businesses)
- Risk profiles (stable royalties vs. speculative ventures)
- Tax implications (royalty income vs. business income)
Evaluating an SPV with multiple revenue streams requires understanding each component's dynamics and how they interact.
Artist career evolution
Artists' careers can change dramatically. The rapper who assigns music and touring revenue might pivot to acting, generating income the SPV doesn't capture. The singer launching businesses might neglect their music career, reducing streaming revenues.
When revenue streams are diverse, you're betting on the artist's overall business acumen and decision-making, not just their musical talent. This requires different evaluation criteria than traditional music investments.
Limited visibility and control
With multiple revenue streams, tracking performance becomes complex. While streaming data is transparent, private business revenues might be reported only quarterly. You're trusting the artist and manager to accurately track and report diverse income sources.
As a passive investor, you can't influence which ventures the artist pursues or how they allocate their time between music and business. You're along for the ride wherever the artist's career takes them.
Evaluating artist SPV opportunities
Analyzing the complete revenue picture
Look beyond just music metrics:
Revenue diversity: How many distinct sources generate income? What percentage does each contribute? Diversity reduces risk but requires more complex analysis.
Business quality: For non-music ventures, evaluate them as you would any business investment. What's the market opportunity? Competitive advantage? Growth potential? Risk?
Artist as entrepreneur: Does the artist have business acumen beyond their creative talents? What's their track record with previous ventures? Who are their business partners and advisors?
Revenue correlation: Do all revenue streams depend on the artist's relevance, or could businesses succeed independently? A fashion brand might outlive an artist's music career.
Understanding assignment structures
Carefully review what's actually included:
- What percentage of each revenue stream is assigned?
- Are there carve-outs or exceptions?
- Can the artist add new revenue streams to the SPV?
- How are future ventures treated?
The most investor-friendly structures include broad language capturing "any and all" revenues with high percentages assigned.
Assessing artist alignment and commitment
When artists include multiple revenue streams, they're showing serious commitment to investor success. Key indicators:
- Are they assigning significant percentages of their core revenues?
- Do they have skin in the game through their own investment?
- How do they communicate about balancing various ventures?
- What's their long-term vision for their career and businesses?
The future of artist SPVs
The artist-as-entrepreneur model is becoming standard. Future musicians will launch careers expecting to build multiple businesses, not just release music. SPVs that capture this full economic picture will become the norm, not the exception.
Technology will enable better tracking and automation across diverse revenue streams. Unified dashboards will show real-time performance across streaming, touring, merchandise, and business ventures.
As artists become more sophisticated entrepreneurs, their SPVs will resemble startup investments more than traditional royalty deals. Investors will evaluate artists like founders, looking at their ability to build and scale multiple businesses while maintaining their creative edge.
Making artist SPVs work for you
When you invest in a comprehensive artist SPV, you're buying into a creator's entire economic future. You're betting that their combination of talent, brand, and business acumen will generate attractive returns across multiple revenue streams.
Success requires evaluating artists as both creatives and entrepreneurs. The best opportunities combine strong artistic talent with genuine business vision and execution ability. Look for artists who view their investors as true partners in building something bigger than just a music career.
Whether you're drawn to an artist's music, their business ventures, or their overall brand potential, comprehensive SPVs offer unique access to participate in the modern creator economy. You're not just investing in songs or businesses—you're investing in the full economic potential of creative entrepreneurs who happen to be artists.
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Disclaimer: Investing in private markets is risky and there are no guarantees of a return. Most of the investments on the Mars platform are illiquid and long-term investments.
