SPV (Special Purpose Vehicle)
An SPV is a dedicated legal entity created to invest in a single deal, allowing multiple investors to participate as one line item on the cap table.
Definition
Definition A Special Purpose Vehicle (SPV) is a legal entity formed for a specific investment purpose, commonly to invest in one company or one transaction. Investors subscribe into the SPV, and the SPV makes the investment, appearing as a single shareholder on the company’s cap table. Context SPVs are widely used in venture to simplify cap tables, aggregate smaller investors, and streamline administration. Terms can vary meaningfully: SPVs may charge management fees or carry, may have different voting arrangements, and may use different administrative structures. The legal and tax treatment depends on jurisdiction and structure. Allocator and Family Office Relevance Family offices use SPVs to access specific deals without committing to a full fund, or to co-invest alongside a trusted lead. The key diligence points for families include fee and carry terms, governance rights, information rights, administrative quality, and clarity on who controls decisions at the SPV level. Decision Authority and Process Considerations SPVs can trigger additional review because they introduce an intermediary layer between the family and the company. Counsel review is common, especially when SPVs involve complex terms, unclear control, or mismatched timelines. Key Takeaways SPVs pool investors into a single-deal vehicle Simplify cap tables but add a governance layer Terms vary: fees, carry, control, and reporting Families should diligence administration and rights carefully