Angel 101: Terms & Tech
SPV means “special purpose vehicle”
It’s a term that provides zero additional insight into what it really is or does.
Most angel investing is done through SPVs
SPVs, or Special Purpose Vehicles, are commonly used in angel investing. Think of an SPV as a small investment fund focused on backing a single company.
By using SPVs, startups can aggregate smaller investments into a single entry on their shareholder list, known as the cap table. This approach streamlines administrative tasks for startups, saving them time and money on legal fees and overhead.
Without SPVs, startups would face challenges in managing numerous small investments, as obtaining shareholder approval for each decision is cumbersome. SPVs make it feasible for founders to welcome investors making smaller investments, typically ranging from four to low five figures, into their companies.
An SPV is just a Delaware LLC
When investing through an SPV—regardless of whether it is on AngelList, Sydecar, or Play Money—you are essentially becoming a limited partner in a Delaware LLC. This LLC acts as a conduit for your investment. It pools the funds from multiple investors, like you, and then makes the actual investment in the startup using standard financing terms, typically a SAFE note in the early stages.
What’s a Syndicate
A Syndicate is a group of people pulled together in an SPV, sort of like a murder of crows or a mob of meerkats, but for investing. And “to Syndicate a deal”—the verb format—is to solicit folks to invest in an SPV you are running.