SPV (Special Purpose Vehicle)
A standalone legal entity created to pool capital from multiple investors into a single company or deal.
An SPV is a purpose-built legal entity — usually an LLC — formed to make a single investment, letting many individual backers pool their capital as one line item on a company's cap table rather than each appearing separately. It's commonly used for scout checks, syndicate deals, or when a fund wants co-investors in a specific opportunity outside its main fund.
SPVs simplify the target company's cap table (one entity instead of dozens of names) and let sponsors charge a management fee and sometimes carry on the specific deal, separate from any main fund economics. They're especially common for oversubscribed, high-demand rounds where a lead investor wants to bring in outside capital without cluttering the company's official shareholder list.
A well-known angel gets access to a hot Series A round and opens a $2M SPV, raising from 40 individual backers at $50,000 average checks; the SPV appears as a single line on the company's cap table, and the sponsor takes a 20% carry on the SPV's eventual gains.
Founders should ask who's actually behind an SPV before accepting it on the cap table — the practical relationship and support you get is with the underlying backers, not a faceless LLC name, so understand who you're really adding as an investor.
Why do investors use SPVs instead of investing directly?
SPVs let sponsors pool many smaller backers into one cap table line, simplify the target company's shareholder list, and let the sponsor collect a fee or carry for organizing access to the deal.
Related terms
Run the numbers yourself: dilution, SAFE conversion, and fund-returner calculators.