In venture capital investing, an SPV works by combining funds from multiple investors into one legal entity that invests directly into a startup. Instead of the startup managing dozens of individual investors, the SPV appears as a single entity on the company&rsquo;s cap table. According to <span class="hover:entity-accent entity-underline inline cursor-pointer align-baseline">Angel School</span>, this structure benefits both startups and investors by streamlining legal documentation, improving operational efficiency, and simplifying communication between all parties involved in the investment process.