What is a Roll-Up Vehicle?
Roll-Up Vehicles are special purpose vehicles that make an investment into a company. It provides a way for founders to efficiently allow investors into financing round without incurring expensive legal fees or making the company’s cap table more complicated.
Roll-Up Vehicles, a type of Special Purpose Vehicle, differentiate founders in that they provide a single cap table entry without requiring a stand-in investor to act as a general partner or fund leader; accordingly, RUVs can be created by the fundraising founder.
Instead of directly investing in the company, investors can subscribe to a special purpose vehicle which is able to then invest into the company on the terms listed on the RUV investment page.
How is this different from investing directly?
RUVs make the process of investing in companies easier to manage for everyone. Instead of directly being on the company cap table, the investor becomes a limited partner of a special purpose vehicle which itself will be on the company’s cap table. This relieves investors of the requirement to interface with the company’s legal team for shareholder consents, conversions, and ongoing questions. Instead, they get a single dashboard on AngelList that provides the details of the investment.
Why do founders use RUVs?
Founders prefer to use RUVs to aggregate multiple checks into a single form. Often, companies incur additional costs from attorneys and ceiling table vendors for each additional shareholder to close out investors. The RUV authoritizes founders to expand access, control closing costs, and make sure that the cap table is as simple as possible.
What are the requirements to invest in a RUV?
They are the same as the necessities to invest directly in a company. The US accreditation requirements must be completed and standard KYC checks must be passed.
What if the investor is not based in the US?
The investor is still ready to participate within the RUV, as long as the investor is able to meet US accreditation and KYC requirements. But eventually, the investor will need to wire funds in US dollars to close the investment.
One Link for All of Your Angel Checks
It’s a way for founders to streamline the process of receiving angel investments by rolling up every check into a single line on the cap table. Founders just apply to use a Roll-Up Vehicle, spin up a deal page, and a shareable link is made that can be given to any investor. Investors can wire funds directly through that link and therefore the rest is essentially taken care of.
AngelList, alternatively, wants to usher founders into banking services. The banking tool has two sections; deposit accounts with interest and debit cards. Both accounts make it easy for founders to automatically accept wire transfers from investors, which can then be mixed into the new cap table tool.
Venture Capital Investments with the SAFE Mechanism
Simple Agreement for Future Equity (SAFE), signed between the investor and the entrepreneur, in which the investor has the option to acquire shares in the company to be established or established in the future in return for the investment made, and the entrepreneur undertakes to give shares to the investor from the company to be established or will receive investment in return for this cash investment in the future. It is an investment agreement that has no maturity, no interest on the investment, and provides the capital/equity that the entrepreneur needs.
AUTHORS
Attn. Ferhan Yıldızlı
Selenay KÖSE, Legal Trainee