Special Purpose Vehicle (SPV)

A legal entity created to hold a specific investment on behalf of a group of investors.

Example

An SPV that holds shares in one startup for all members of a syndicate.

Important

Setup and administration costs reduce the amount actually invested, and investors hold an interest in the SPV rather than shares in the company directly.

Related terms

• Syndicate — A group of investors pooling money to invest in a single company alongside a lead investor, typically through a special purpose vehicle.

Lessons that explain it

• Good co-investors share deals, diligence and the hard conversations — Relationships with other investors - syndicate leads, angels and funds - provide deal access and shared diligence. They are built on reciprocity, reliability and honest views about deals. (10 min)
• A syndicate lets you back one deal alongside a lead, and charges carry on that one deal — Syndicates pool individual investors into a single-purpose vehicle to invest in one company alongside a lead investor. They lower minimums and provide access, while charging carry and fees on each deal. (12 min)

All 578 terms in the Investing glossary