Glossary
Crowdfunding vehicle
What a crowdfunding vehicle (crowdfunding SPV) is, the conditions Rule 3a-9 sets for it, and why companies use one in a Reg CF raise.
A crowdfunding vehicle, often called a crowdfunding SPV, is an entity formed by a company to hold its Reg CF securities on behalf of all the investors in that offering. Investors own interests in the vehicle, and the company's cap table shows the vehicle as a single holder. The vehicle and the company are co-issuers of the offering.
The conditions
Under 17 CFR 270.3a-9, a vehicle is not treated as an investment company only if it holds a single class of securities of a single company, raised through Reg CF; issues one class of its own; does not borrow; matches its interests one for one with the securities it holds; has the company's fiscal year; is paid for entirely by the company; follows investors' voting instructions; and passes all information and rights through to investors.
Why it matters
A single holder simplifies the cap table for later investors and acquirers. Interests held by individuals in a crowdfunding vehicle may also be excluded from the Exchange Act holder-of-record count (17 CFR 240.12g5-1(a)(9)). It does not reduce what investors are owed; it moves the administration to the vehicle. See Transfer agent.
Further reading
- Crowdfunding SPVs, and when one belongs in your raise
- How to manage a cap table with thousands of investors
This page is general information about securities rules, not legal advice. Whether a vehicle fits a particular raise is a question for securities counsel and the company's accountant.