BSP Initialization
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All entities from the map are spawned and initialized from the MapEntity_ParseAllEntities function within mapentities.cpp located in src/dlls directory, with the pMapData string containing all the relevant entity info. The MapEntity_ParseEntity function takes care of actually spawning an entity and setting up its keyvalues etc.
This text was taken from a post in the VERC Network Forums, you can see the thread here