Special Purpose Vehicle (SPV)

- A legal entity created to isolate investment risk, often used to pool capital from investors into a single target investment.

Scenario:

An angel syndicate pools capital from multiple investors into an SPV to invest in a single high-growth startup.

Why This Matters:

Enables collective investment, limits liability, simplifies cap table, provides access to larger deals.

The Process:

A lead investor sets up the SPV, manages legal and compliance, and allocates returns pro rata.