LP groups for SDVOSBs?

August 28, 2025

by a searcher from Harvard University - Harvard Business School in Boston, MA, USA

Hey, I'm posting for a friend who is interested in acquiring an SDVOSB. My understanding is that these have to remain majority owned by service-disabled vets. Are there funds or investor groups that are made up of SDV LPs?

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Reply by a searcher
from United States Military Academy in Washington, DC, USA

You have to be careful here because certification as an SDVOSB is not limited to financial ownership but also control of the day to day operations and the SBA states the following: Service-disabled veteran(s) must control the day-to-day operations and long-term decision-making. Requirements include: -Highest officer position held by a service-disabled veteran (e.g., CEO, President). -Authority over strategic decisions, contracts, hiring, and financial management. -If multiple owners, the veteran’s control must be clear and documented. Just having a fund where the LP's are service disabled vets will not solely meet the requirements here

Reply by a searcher
from Georgetown University in Helena, MT, USA

On a side note - a lesson learned for the other veterans out there looking to purchase a business with the intent to qualify the business purchased as an SDVOSB: I am a SDV and purchased a business with the intent to qualify the business as an SDVOSB. I raised ~ 20% of the equity through class A preferred shares from outside capitol. ~41% of that capital was raised from SDV's. I owned 100% of the class B shares (~80% equity and had some class A). Notably, class A shares had zero control or voting rights. However, when it comes to receiving the SDVOSB classification, the SBA looks at each class of equity separately. Because SDV's didn't own >51% of the class A shares, my application for SDVOSB was denied despite SDV's owning ~88% of the total company equity. Food for thought.

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