What is a Special Purpose Vehicle (SPV)? An SPV is a legal entity created to pool money from investors, typically to make a single investment in a specific company. Unlike traditional funds that diversify across multiple investments, an SPV focuses on one opportunity. Why use an SPV? - SPVs help General Partners (GPs) when their fund lacks enough capital for pro-rata allocations. - They also allow GPs to invest in companies outside the fund's usual strategy. - For new GPs, raising an SPV enables them to present a specific investment opportunity to LPs instead of a broad thesis. A syndicate and an SPV are similar in many ways, but the key difference is that an SPV requires the formation of a legal entity to make the investment, whereas a syndicate is simply a group of investors, with a lead investor managing the deal.
