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A special purpose vehicle (SPV) is a business entity, often a limited liability company (LLC) or limited partnership (LP), that’s created for a specific purpose, such as investing in a startup.

As a founder, you may encounter SPVs when you’re trying to raise money. Some VC firms or groups of angel investors may create an SPV, such as a roll-up vehicle (RUV). They invest in the RUV, which then invests in your company. And because LLCs and LPs are pass-through entities, all the income and losses get passed through to the members that are part of the SPV.

You may also be able to benefit from investors’ using an SPV because you’ll only have to manage the paperwork for one deal and all the funding gets added to your cap table on a single line.