A special purpose vehicle (SPV) is a legal entity — often an LLC or limited partnership — formed to make one specific investment. Many smaller investors commit to the SPV, which then invests in the startup as a single shareholder, keeping the company’s cap table clean.
SPVs are widely used in angel syndicates and for follow-on or pro rata investments. They concentrate administration and voting in the SPV’s organizer, but require careful attention to securities-law limits on the number and type of investors and to fee and carry terms.
Related practice areaInvestment Management →