Understanding RUVs
What are Roll Up Vehicles (RUV)?
RUVs are Special Purpose Vehicles that allow founders to consolidate multiple investors into a single entity (the RUV), which then signs the investment documents and sends a single wire to the company. It saves founders from managing multiple investors’ paperwork and legal costs, both now and in future rounds. AngelList handles the entity formation, collection of funds, tax filings, and post-investment activities for the lifetime of the RUV.Ready to Invest?
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Why do companies use Roll Up Vehicles?
RUVs allow companies to have a cleaner cap table, which can position them better for future fundraises or M&A transactions. RUVs also allow the company to accept investors that they otherwise would not accept directly due to the check size or logisticial constraints. In addition we find that companies often save tens of thousands of dollars on cap table costs and administration as compared to accepting direct checks. Our estimations, suggest that a seed stage company that is considering using an RUV for 45 angels will save $75,000 over the lifetime of the company (when compared to the costs of allowing 45 direct investments).What is the legal structure of the RUV?
RUVs are structured as series Delaware Limited Partnerships. Each RUV is a distinct series under a Master Partnership called “Roll Up Vehicles, LP”. An example RUV legal name would be “LD Fund I, a series of Roll Up Vehicles, LP”. This is the entity name that will appear on the company’s cap table and sign the investment documents. The fund’s general partner is Fund GP, LLC, an AngelList-approved entity. The RUV’s Investment Adviser is Platform Advisor, LLC (unless otherwise indicated). RUVs are administered by Belltower Fund Group, AngelList’s preferred fund administrator.
How are these legally different from normal AngelList SPVs?
RUVs are specifically designed for companies, in a way that addresses important compliance and conflict of interest issues. While, AngelList SPVs are more suited for venture funds and syndicates. RUVs utilize the same AngelList SPV documents, which you may have seen before, but without formal advisory involvement from an external third party (specifically, the RUV offering does not involve a “Fund Lead” or “Sub-Adviser” and there is no management fees or carry charged on the vehicle). Rather, Platform Advisor, LLC, performs the role of an Investment Adviser, that acts in the best interest of the investors in the RUV. Any decisions are based on standard market practices, that aligns with similarly situated shareholders.Is this different from making a direct investment?
It is different than making a direct investment because of the structure of investing into a Limited Partnership vehicle (RUV), which then makes the investment into the company.What is the difference between investing direct vs through an RUV vs through an SPV?
| Direct | RUV | SPV | |
|---|---|---|---|
| Definitions | Direct means investors participate in the company’s round individually. | RUV stands for Roll Up Vehicle and is purpose-built for companies to pool investors into a single vehicle, compliantly. | SPV stands for Special Purpose Vehicle and is built for VCs to pool investors into a single vehicle. |
| What does it mean? | - Investors sign Company financing docs (SAFE/equity round docs); wire funds directly to Company | - Investors sign RUV’s subscription docs; wire funds to RUV - Then RUV signs Company’s financing docs; wires funds to Company - RUV managed through AngelList by Company | - Investors invest via pooled vehicle, run by the VC (or GP) that is running the SPV who serves as its Manager / General Partner (the “lead”) - Investors sign SPV’s subscription docs; wire funds to SPV - Then SPV signs Company’s financing docs; wires funds to Company - SPV managed through AngelList by VC |
| Who makes decisions? | Each investor manages their own investment, including legal reviews, signatures, consents, and notices. | Centrally managed through AngelList*, as per standard market practices followed by similarly situated investors. | SPV lead manages and decides on behalf of all investors. |
| Cap table representation | Investors are Direct shareholders on company’s cap table. | Investors are Limited Partners in a pooled vehicle (i.e. RUV). RUV is direct shareholder on company’s cap table. | Investors are Limited Partners in a pooled vehicle (i.e. SPV). SPV is direct shareholder on company’s cap table. |
| Investor economics | Investors keep full ownership of their investment in the company. | Investors retain full 1:1 ownership economics (no fees/carry deducted). | Investors Oownership & returns are potentially reduced by fees and carry paid to the VC/GP. |
| Costs to Company & Investors | Low upfront costs for company and investors, but legal, admin and cap table costs compound over time. | Company pays nothing to start raising, then pays a flat one-time admin fee when finished raising the RUV. Investors pay nothing (no admin fee, SPV management fee, or carry). | Company generally pays no fee. Investors often pay various fees: one-time or ongoing admin and management fees, and carried interest. |
| Investor voting rights | Each investor holds and exercises their own standard rights tied to their position. | RUV holds the standard rights tied to its position. Generally, the RUV exercises these neutrally through AngelList*. Companies may handle certain routine votes. | SPV holds the rights; the lead decides how they’re used on behalf of all investors. |
| Pro-rata rights | Each investor negotiates directly with the company. | Not standard, but companies may offer pro-rata to individual RUV investors (via direct allocation or through a new RUV). | SPV lead negotiates with the company; if they secure pro-rata, they decide how to share or use it. |
| Pay-to-Play | If the company sets pay-to-play terms, investors must participate directly or face dilution. | If the company sets pay-to-play, the company may setup a new RUV and call on investors for more capital. | If the company sets pay-to-play, the lead decides whether the SPV participates and may call on investors for more capital. |
| Exit management | Investors self-manage the exit logistics | Professionally managed through AngelList – investors receive cash distributions or share delivery, if applicable. | SPV lead manages on behalf of the group, with SPV admin support if available. |
This comparision chart is provided for a high level overview only of the most common configuration for RUVs and should not be considered a replacement for reading the legal documents. Please consult the RUV fund documents (LPA, PPM, and Subscription Agreement) and any applicable disclosures for full details.
When should I consider direct investment instead of an RUV?
Consider a direct investment if both you and the company want to maintain direct negotiations for future decisions, or if you’re an institutional investor who cannot delegate voting rights, or your investment mandate requires direct ownership.General Requirements
How easy is it for me as an investor?
Investors often say that investing through RUVs is significantly easier than making direct investments. RUVs allow investors to complete their commitment within minutes and fund their commitment over ACH, Wire or Crypto.Do I need to be accredited?
Yes. All investors in RUVs must be accredited. For most Roll Up Vehicles, a self attestation of accreditation status is collected during the investment process.Does AngelList perform a KYC check?
Yes. We verify investor identity as required by law. After completing the investment flow, we automatically verify individual investors using their name, address, and date of birth. For entity investors that don’t pass automatic verification, our KYC team will request additional documentation via email. Once verified, you can reuse this KYC approved-entity for future investments on AngelList.What information do I need to provide for KYC?
For individual investors: Name, address, date of birth, social security number/tax ID, government-issued ID (if requested). For entity investors: Entity details and documentation, beneficial owner information, additional documents based on entity type and jurisdiction.How much does an RUV cost?
The cost of the RUV administration is generally paid for by the company, so you generally incur no additional administrative cost for making your investment. Any potential state filing fees (i.e. Blue Sky Fees) are also paid for by the company..Investment Documents
What documents will I sign?
As an investor in the RUV, you do not sign the actual investment docs (like a share purchase agreement or a SAFE), instead by closing online, you subscribe to the special purpose vehicle (i.e. the RUV) which is the entity that will sign the actual investment docs with the company. Specifically, you are e-signing (on AngelList) RUV closing documents that consist of:- The (RUV) Limited Partnership Agreement
- This is where the parties establish respective rights and obligations to the fund, as well as the rules, processes, and procedures that shall govern the business and affairs of the fund.
- The (RUV) Subscription Agreement and Privacy Notice
- This document outlines the mechanics that surround the flow of funds to the RUV.
- The Private Placement Memorandum (PPM)
- The PPM describes the terms of the offering, details about the investment vehicle, and the risks of the investment, among other things.
Will I get a copy of the financing documents?
No, we generally do not share the actual company financing docs with RUV investors, though you may ask the company for those documents. As the Investment Adviser, AngelList reviews the financing documents before signing them, to ensure the investment terms generally match what the company disclosed to you on the platform.What if the investment terms are changed after my commitment?
If any of the material investment terms that were disclosed to you at the time of your commitment, change after in a manner that is adverse for investors, we will send you a notice and provide an option to opt-out of the investment. Examples of changes that option to opt-out: adverse changes to funding instrument, adverse changes to valuations or discount terms.Rights & Restrictions
How does the Voting Proxy work?
The proxy gives the company the right to vote on behalf of the RUV for non-Material Matters. For Material Matters, AngelList’s approved Investment Adviser makes the voting decisions based on standard market practices and aligns with similarly situated investors.Material Matters can generally be separated into two categories:1. Anything impacting the rights privileges and responsibilities of the investors
(Ex: If the preferred stock that investors acquire comes with certain rights and there is an instance where they could potentially lose those rights).2. Any changes to the company
(Ex: If the company is preparing for IPO, going for a merger or major corporate restructuring, such as when the company is splitting off or rolling into another entity).
How are pro-rata rights handled?
RUVs generally do not have pro-rata rights in the portfolio company’s future financing rounds. While some companies may offer pro-rata rights, pro-rata rights vary in strength, and can often be waived or removed at the company’s discretion.What about pay-to-play provisions?
RUVs generally do not participate in pay-to-play financings. The company would retain the discretion to (or not to) to offer the ability directly participate to RUV investors.Will I be entitled to a token warrant if the deal’s terms included one?
If the deal includes a token warrant, it is offered to the RUV, and the company agrees to the provisions of AngelList’s RUV Token Warrant pricing & guidlines, then the RUV may purchase a token warrant for the vehicle. The exact distribution and exercise mechanisms vary, but should the warrant be exercise and sold into USD, the proceeds sent to the RUV and will be distributed pro-rata the proceeds back to you (RUV investors).Are there transfer restrictions on the members?
Yes. Generally, you will not be able to freely sell or have your investment redeemed. The RUV is a good instrument for long-term investors. The RUV template documents contains customary transfer restrictions that prevent limited partners in the RUV from transferring their interests in most cases. These are specified in Article 6 of the LPA. That said, the LPA allows for transfers to be done for estate planning purposes. In those cases, email invest@angellist.com to initiate a transfer and we’ll guide you through the process.If you might need ownership flexibility, we recommend investing through an entity structure (like a jointly owned entity) rather than planning to transfer later.
What about liquidity & exits?
If a secondary liquidity opportunity is presented to the RUV by the company, the investment adviser will generally not sell shares in a secondary sale opportunity. For an exit, when we receive distribution proceeds, we will distribute them to LPs. In some cases (like an IPO or acquisition by a public company), we may directly disburse stock to the brokerage accounts of the RUV members, depending on the feasibility, volume, and fees associated with the transaction (which are passed through to the RUV).Tax & Reporting
Do QSBS benefits flow through to investors?
RUVs are Delaware Limited Partnerships which are pass through entities, so any eligible QSBS benefit or other benefits would flow through when investing in an RUV*. *Not tax advice. Consult your own tax advisor.Will I receive a K-1?
The RUV will issue a K-1 to you, but it generally will be a $0 K-1 in the first year (we are required to create one in the first year of the RUV). Future years will only have a K-1 issued if there is a distribution or other taxable activity.Other Help Center Articles that may be useful:
- What are the tax consequences for non-U.S. investors?
- I’m foreign. Do I need to file a US tax return?
- When will I receive my K-1 for the prior tax year?
- My tax package says I won’t receive a K-1 for the year, why not?
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Have other questions? Email us at rollups@angellist.com