How an SPV Works

To better understand how an SPV operates, consider a simple example.

A private company is offering shares to select investors. Instead of requiring each investor to commit a large amount individually, an SPV is formed. Investors contribute capital to the SPV, which then uses those funds to purchase shares in the company.

Each investor owns a proportional interest in the SPV based on their contribution. The SPV itself is listed on the company’s cap table, while individual investors hold indirect ownership through the vehicle.

This structure allows investors to participate in private deals with smaller amounts of capital while benefiting from collective access.