An SPV (special purpose vehicle) is a standalone entity — usually an LLC — formed to invest in a single company or defined transaction, syndicating capital from many backers into one holder on the cap table.

How it works

A lead sets terms: allocation, minimum check, carry, and admin fee. Investors subscribe to the SPV; the SPV signs the company’s stock purchase agreement as one investor. Economics pass through pro rata to SPV members per operating agreement.

Platforms (AngelList, Sydecar, etc.) handle entity formation, banking, and tax K-1s. GPs use SPVs for co-invest overflow when fund limits cap ownership, or for LPs wanting deal-by-deal exposure.

Founders prefer fewer cap table lines — one SPV beats fifty angel names — but large SPVs may still need board observer negotiation with the lead.

Why it matters

• Founders: Know the SPV lead and decision-maker — the entity is passive but the lead represents the block in future votes and pro rata.
• Investors: SPV fees and carry stack on fund economics if you invest twice. GPs must avoid allocating hot deals to personal SPVs over the institutional fund against LPA rules.
• GPs: Securities laws and broker-dealer rules apply to repeated SPV sponsorship — compliance matters at scale.

Common mistake

Investors ignoring SPV carry and admin fees when comparing net exposure to investing through a fund with existing fee structures.

Related ideas

• Sidecar fund
• Angel syndicates and scout programs
• Cap table line consolidation