Special Purpose Vehicle (SPV)

by Haley Bryant March 14th, 2022

What is a Special Purpose Vehicle?

In angel investing, a special purpose vehicle is an entity formed to pool capital from multiple investors to fund a company.

Why are Special Purpose Vehicles important?

In angel investing, SPVs are used to enable a group of up to 249 investors to invest in a company as a single line on that company's cap table. The number of investors may vary based on the size of the allocation.

Syndicate leads use an SPV to invite investors in their syndicate to invest in a deal. Syndicate leads set investment minimums as low as $1,000 plus carry. Carry is the percent of profits a lead gets and is typically 20%.

SPVs allow investors to invest on a deal by deal basis at a lower ticket size than a direct investment.

FAQs

What's the difference between an SPV and a fund?

An SPV is formed to invest in a single asset whereas a fund allows investment in multiple assets. Both an SPV and a fund pool capital for investing purposes.

What's the difference between an SPV and an RUV?

An RUV is a type of SPV often used by founders to raise capital directly from investors without the involvement of a lead investor. The RUV is exclusive to the AngelList platform.

What's the benefit of investing through an SPV versus directly?

While some founders may take checks as low as $5k at pre-seed, many set higher minimums especially in later stage rounds. SPVs give more investors access at a lower buy in. The lower buy in makes them more inclusive and enables more portfolio diversification, where you can make five small bets with $5k instead of one larger bet.

What platforms can investors use to create SUVs?



Your cart
    Checkout