We sit down with NEO’s Head of Finance, Healy Jones, to talk SB 54, SPVs, and why every fund needs a liquidity strategy.
Quick question: who at a venture fund actually knows where all the money is?
It’s not the GP. (Sorry, GPs.)
It’s whoever owns the finance function. Whether that’s a dedicated CFO, a principal who inherited the spreadsheets, or a fractional CFO juggling five funds at once.
Yet if you look around the internet, practically all of the VC related content you’ll see focuses on deals, fundraises, and portfolio wins.
Until today. That’s why I’m thrilled to welcome you to the Office of the Venture CFO, a new monthly newsletter from Venture5. Each issue, we sit down with a finance leader at a top fund and dig into what’s actually keeping them up at night, and how you can apply their hard earned insights to your own firm.
First up: Healy Jones, Head of Finance at NEO. On the agenda: California’s SB 54, the art of running SPVs, and why every fund needs a liquidity strategy.
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CALIFORNIA SB 54: COMPLIANCE UNDER PRESSURE
“It feels a little ham-fisted in terms of the actual execution.”
Venture5: SB 54 was the first thing you wanted to talk about. It’s clearly top of mind. Can you break down what it is and why venture CFOs should be paying attention?
Healy Jones: California SB 54—formally the Fair Investment Practices by Venture Capital Companies Act—is intended to force venture firms to reveal demographic information about the individual founders they’re investing in. The idea is to shine light on the industry, and I’d assume the legislature is expecting this will help VCs invest in more diverse founding teams. It feels a little ham-fisted in terms of the actual execution, though. The website just launched, we’re supposed to start surveying our founders March 1st, and we can’t even log in yet. We have to report by April 1st. That’s a really tight turnaround.
Venture5: And the scope is broader than people might expect, right? It’s not just California-based funds.
Healy Jones: Exactly. If you have any sort of nexus in California—you made an investment there, you solicited an investor from California, or you’re headquartered there—you have to comply. So a German venture capital fund that has one investor in California would actually have to do this. And the law says you’ve got to survey every company you invested in during 2025, regardless of where they’re domiciled, regardless of where you’re domiciled. It’s a pretty aggressive law.
Venture5: You mentioned the data collection process itself has some real pain points.
Healy Jones: My understanding from our lawyers is that we have to use a specific PDF produced by the state to do the survey. We can’t use SurveyMonkey or any other tool. That means we’re basically sending paperwork to our founders, and I don’t like having founders do paperwork—I want them focused on building the business. So I worked with Gavel (one of our portcos that does legal AI) to build a simple webform that founders can fill out instead. Takes about 2 min, and it generates the compliant PDF and sends it back to us. Founders never have to touch the state form. It’s free for VCs to use.
Venture5: What about the privacy angle? You mentioned that creates real tension for funds operating across jurisdictions.
Healy Jones: This law asks for very personal information—gender, race—and most venture firms aren’t really set up to store that type of data. Plus, the law requires you to hold the data for five years. Meanwhile, European privacy rules give people the right to delete, which directly conflicts with this law. I feel for people who’ve got to deal with multiple jurisdictions. I’ve talked to several law firms about it and they’re not exactly sure what’s going to happen with it either.
“European privacy rules give people the right to delete, which directly conflicts with this law.”
Venture5: Have you thought about using vibe-coded tools to help with the collection?
Healy Jones: Both law firms we talked to were pretty adamant that we have to use the specific PDF. So we can’t replace it. But I have thought about creating some sort of app to distribute it out, collect it back, and analyze the PDFs. Or at least vibe-code something to take the PDFs we get back and compile them into the submission PDF. We’ll see.
Venture5: Are your LPs asking about this?
Healy Jones: They assume we’re going to comply with all rules and regulations, and we will. But it’s not something that’s super important from their perspective. The frustrating thing is we actually internally keep this data already—we care about it—but we can’t use what we’ve collected on our own. We have to use their PDF.
SPVs AS A STRATEGIC TOOL
“For our limited partners, it’s actually a pretty amazing perk—they get direct access to companies they wouldn’t easily be able to get into.”
Venture5: There’s been a lot of SPV activity related to your portfolio. How do you think about SPVs as part of NEO’s strategy, and how do your LPs view them?
Healy Jones: From our perspective, the special purpose vehicles are important because if we make a very early stage investment and that company grows over time, we may have the option to invest in a Series D or E—and those can be very large checks that start to get outside the mandate of our early stage fund. SPVs give us a mechanism for continuing to deepen or maintain that relationship with our important portfolio companies. For our limited partners, it’s actually a pretty amazing perk. They get direct access to companies they wouldn’t easily be able to get into. Even the LPs that decide not to invest are usually very appreciative of getting the access and the opportunity.
Venture5: LPs always say they want to do directs. But in practice, when a deal comes up, it’s not always that simple, right?
Healy Jones: It’s a different motion than investing in a fund. When you’re investing in a fund, you have a long time to make an evaluation—it takes several months, multiple conversations, time for reference checks. A hot Series D driven by one of the mega funds can come together in 10 days. A lot of LPs are excited about directs, but they don’t necessarily have the motion in place to execute. And it is a different type of analysis to evaluate a company versus a fund.
Venture5: How do you think about the economics of an SPV versus a fund?
Healy Jones: The fees tend to be less than what they’d be for a standalone fund, which makes sense because it’s a lot more work to make 50 different investments versus one. Generally it’s a lower carry threshold than a traditional fund, and that feels pretty on-market. I’ve seen anywhere from no carry to around 15% carry. From the LP perspective, it’s definitely less expensive. From the fund’s perspective, you want to be careful—it’s one entity that has to do really well. You don’t want to change the mentality of your firm into a ‘get rich off one deal’ thing. This should be a perk for your limited partners, not a retirement plan.
Venture5: Any best practices for how you team SPV deals internally between the GP and the finance side?
Healy Jones: Something we’ve done well is letting our LPs know about the most exciting companies in the portfolio over time. We have regular conversations where we mention certain names, so when a company raises and we want to do an SPV, they already know the name. They’re not starting from scratch. From the CFO side, it’s my job to maintain data—clear understanding of the company’s financial performance, our ownership, anything interesting about the legal structure—so we can quickly package it in a way LPs can digest. And the GP’s most important job is having a solid relationship with the founder to secure the allocation. Even if you have pro rata rights, you don’t always get your allocation. You need to be delivering significant value.
SECONDARIES AND MANUFACTURING LIQUIDITY
“Manufacturing liquidity is a new skill that venture funds need to have.”
Venture5: What’s something about secondaries in this market that isn’t getting talked about enough?
Healy Jones: From my perspective, manufacturing liquidity is a new skill that venture funds need to have. Ten years ago, a company goes public, you get the stock, it’s liquid. Or Google acquires 20 companies a year and you get liquidity. Those things aren’t happening right now. The best venture investors need to understand how to manufacture their own liquidity, and secondaries are how they’re doing it. That’s the piece I think is actually missing most from the conversation.
Venture5: Do you think there’s a point where a fund needs a dedicated secondary specialist on the team?
Healy Jones: Yes, and some of the really big funds already have that—they may not be titled that, but they have that function. I’ve fielded questions from LPs invested in many different funds asking what we’re hearing in the secondaries market, and it turns out some funds have a team that’s basically old-school brokers on the phone calling around to figure out clearing prices for different holdings. It’s pretty manual right now. In an ideal world it’d be purely liquid like public markets, but that’s not the reality. It’s a very old-school system at this point.
