--- title: What is a Special Purpose Vehicle (SPV) and why should I use one? description: SPV for Regulation CF --- [Skip to content](https://help.dealmaker.tech/what-is-a-special-purpose-vehicle-spv-and-why-should-i-use-one#main-content) English Show submenu for translations [![DealMaker Logo](https://help.dealmaker.tech/hubfs/DealMakerLogo2025.svg)](https://dealmaker.tech/) Open main navigation Close main navigation - English Show submenu for translations - [Go to DealMaker](https://dealmaker.tech/) [Go to DealMaker](https://dealmaker.tech/) How can we help you? - There are no suggestions because the search field is empty. 1. [Knowledge Center](https://help.dealmaker.tech/?hsLang=en) 2. [Step 2: Launching A Deal](https://help.dealmaker.tech/step-2-launching-a-deal?hsLang=en) 3. [FAQ](https://help.dealmaker.tech/step-2-launching-a-deal?hsLang=en#faq) # What is a Special Purpose Vehicle (SPV) and why should I use one? A Special Purpose Vehicle (SPV) is a separate legal entity that pools investors in a Regulation Crowdfunding (Reg CF) offering. Under SEC Rule 3a-9 it's called a "crowdfunding vehicle." Investors buy interests in the SPV, and the SPV holds your company's securities. The company and the SPV run the offering together as co-issuers, so the SPV shows up as a single line on your cap table. You don't have to use an SPV. Whether one makes sense depends on how many investors you expect, how big the company may grow, and how you want to manage your investor base. **Talk to your securities counsel** first as they will advise on the right structure and jurisdiction. **Pros of using an SPV:** - **Avoids Exchange Act registration.** An SPV helps keep the company below the Section 12(g) thresholds that trigger SEC registration and full public reporting (Forms 10-K, 10-Q, and 8-K, plus the proxy rules). Those obligations apply once a company has more than $10 million in total assets and a class of equity held of record by 2,000 persons, or by 500 persons who are not accredited investors. In a direct offering, Reg CF investors are excluded from that count only while the company continues to meet the conditions of Rule 12g-6 (see Cons). In an SPV structure, the SPV is the sole holder of record and counts as a single holder, so the investors behind it do not count toward the thresholds. - **Simplifies the cap table.** Hundreds or thousands of investors appear as a single shareholder, which reduces the company's administrative burden. - **Centralizes voting.** Votes and consents run through the SPV rather than each individual investor, which keeps governance manageable. - **Eases future fundraising.** A clean cap table is easier for new investors to review and streamlines their due diligence. **Cons of using an SPV:** - **Adds cost and complexity.** Forming and maintaining an SPV involves legal, administrative, and potentially tax costs. - **Can delay launch.** Formation with counsel typically takes one to three weeks, and the SPV needs its own inception financial statements. Companies planning to use an SPV should start early. - **Creates distance from investors.** Investors hold an interest in the SPV rather than shares in the company. - **Limits direct investor voting.** Investors generally cannot vote directly on company matters, which some find unappealing. - **Complicates major corporate events.** A merger, acquisition, or restructuring can be more complex with an SPV in place. - **May be unnecessary for 12(g) relief.** Rule 12g-6 already excludes Reg CF investors from the Section 12(g) count, provided the company stays current on its Reg CF annual reports, has total assets of $25 million or less at fiscal year end, and uses a registered transfer agent. A company that expects to remain within those conditions may be paying for an SPV to solve a problem it does not have. **What an SPV does not do** - **An SPV does not reduce your Reg CF ongoing reporting**. For annual reporting under Rule 202, the SEC counts each investor in the SPV individually, not the SPV as one holder ([SEC guidance](https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations-cfis/consolidated-corporation-finance-interpretations#Regulation_Crowdfunding)). - **If you have 300 or more investors, you must keep filing annual reports** until the count drops below 300 or another Rule 202(b) event applies. Filing one annual report doesn't change this. **Good to know:** - **Engage securities counsel first.** Counsel drafts the formation documents and subscription agreements and advises on the appropriate structure and jurisdiction. - **Form the SPV for this offering.** The SPV must be organized solely to hold your company's securities, and its securities must mirror them one for one. Do not repurpose an existing SPV formed for another reason. - **The SPV can serve later rounds.** A single SPV can be used across multiple Reg CF rounds, provided each round offers exactly the same class of security. - **Going public typically unwinds the SPV.** If the company goes public, SPV investors generally become direct shareholders and the SPV dissolves. Alternatively, investors may direct the SPV to sell its position and distribute the cash proceeds. 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