An SPV (special purpose vehicle) is a separate legal entity — usually an LLC — created for a single purpose: to pool money from multiple investors and hold one investment. In startup fundraising, a lead investor forms an SPV, several backers invest into it, and the SPV appears on the cap table as one line item instead of twenty.

What does SPV stand for in finance?

SPV stands for special purpose vehicle, also called a special purpose entity (SPE). It is a bankruptcy-remote entity whose assets and liabilities sit apart from the sponsor. In venture capital it is used to aggregate a group of investors into a single position in a startup round.

What is an SPV investment?

An SPV investment is money committed to the vehicle rather than directly to the startup. Investors own units of the SPV; the SPV owns the shares or SAFE. Returns flow back through the SPV to its members, typically net of any management fee or carried interest charged by the organizer.

How much does it cost to set up an SPV?

Costs vary by administrator and deal size, and typically cover entity formation, a fund administrator, tax filings (a K-1 per investor each year), and banking. Organizers often also charge carry on gains. Confirm the full fee schedule and who pays it before committing.

Why do founders allow SPVs on the cap table?

An SPV keeps the cap table clean: one entity signs, one entity votes, one entity gets reporting, while the round still gets funded by many small checks. The tradeoff is less direct relationship with the underlying investors, so founders usually ask who is in the vehicle and who controls its voting.

What is the difference between an SPV and a fund?

A fund raises capital first and then invests it across many companies over years. An SPV is raised for one identified deal and dissolves after that position exits. Investors in an SPV know exactly what they are buying; fund investors are backing the manager's future judgment.