Special Purpose Vehicle (SPV) 

A Special Purpose Vehicle (SPV) is a legal entity created for a specific, limited business purpose, often to isolate financial risk or to pool investment capital for a particular transaction. SPVs are commonly used in structured finance, private equity, and venture capital deals. 

Functions of an SPV include: 

• Holding specific assets or liabilities separate from a parent company 

• Facilitating investment in a startup or portfolio company 

• Isolating high-risk assets 

• Allowing multiple investors to co-invest under a single entity 

For example, venture capital firms might form an SPV to allow several investors to collectively invest in a startup’s funding round without becoming direct shareholders on the company’s cap table.