Full Definition
A Special Purpose Vehicle (SPV) is a separate legal entity (usually an LLC) created to pool capital from multiple investors for a specific investment. In startup fundraising, SPVs are commonly used by angel syndicates and small fund managers to consolidate multiple small checks into a single line on the company's cap table.
How SPVs Work
- A lead investor identifies a deal opportunity
- An SPV (typically an LLC) is created for this specific investment
- Multiple investors contribute capital to the SPV
- The SPV makes a single investment in the target company
- Appears as one entity on the company's cap table
Benefits
- Simplifies cap table (one entity vs. many individual investors)
- Allows smaller investors to access deals
- Lead investor manages the relationship with the company
Real-World Example
An angel lead creates an SPV with 15 investors contributing $25K-$100K each, totaling $750K invested as a single entity in a seed round.
Related Terms
A group of angel investors who pool their resources to make larger collective investments in startups.
A spreadsheet showing the equity ownership, dilution, and value of shares in a company.
The primary investor in a funding round who sets the terms, contributes the largest check, and often takes a board seat.
A high-net-worth individual who provides early-stage funding to startups in exchange for equity.
An individual or entity meeting specific SEC financial criteria required to invest in private securities.
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