Roll Up Vehicle (RUV)
Roll-up cars are a type of special purpose vehicle (SPV) used by entrepreneurs and angel investors (RUVs). Instead than needing to collect and record each investment individually, the angels invest in the RUV, which then invests in your company.
An RUV, which was made popular by AngelList, has the benefit of allowing you to collect funds from a number of (smaller) angels without filling up your cap table. When the RUV invests in your company before investing in your angel investors' business, the firm is considered to be a single entity.
- Speed - You can start receiving investor cheques the same day you start business. During the setup process, some fundamental corporate information is required (legal name, terms of the round, AL usernames). After being accepted, which often takes less than 24 hours, you may build links to send out and put up a deal page, which takes 30 minutes. The time it takes to sign and fund your company after you've used up all of your RUV allotment and closed the sale might be as little as 48–72 hours.
- Cost - At present, excepting Blue Sky expenses of about $1k, doing an RUV is practically free because AngelList is paying the standard $8k price. Here is a handy calculator to show how much money you will save over the course of your business by using an RUV as opposed to writing numerous individual cheques. According to estimates from AngelList, a seed stage business considering an RUV for 45 angels will save $75K over the course of the business (when compared to the costs of allowing 45 directly.
- Clean cap table - 1 entity eliminates the need to contact dozens of people in the future to obtain signatures. A RUV can be used to raise up to $10MM from up to 249 approved investors in your business (please note that RUVs exceeding $10MM have various limits based on accreditation status).
- Easy process for your angels - They sign up using your link, enter their information (such as investment amount and accreditation status), accept the terms, and connect their bank, all while AngelList conducts KYC, uses a direct ACH to avoid charging them wire fees, and provides them with a dashboard to access documents and manage their investment over time.
- Higher valuations - Because of the lack of carry and management costs, founders can charge RUV investors a larger value while still ensuring that they will receive the same net returns. According to my experience, this is less significant for a single $1,000 angel but significantly significant for family offices signing huge checks ($100,000+).
- Founder friendly voting rights - Instead of forfeiting their voting rights when selling shares to syndicates or funds, founders can keep their voting rights when selling shares to RUV investors.
- During the most challenging moments, subsequent rounds are streamlined.
- Future games will cost less ($)
- The address and contact details of the investor are kept private.
- streamlined electronic signing and funding for the business and investors at the time of the investment
- A quick (1 hour) extra setup for the company
- Less expensive than usual
- Explaining to your investor who and how AngelList is involved will add difficulty.
RUVs are without a doubt recommended for anyone seeking an early round of venture capital in the following situations:
You want to raise another round in the future.
Moreover, you can choose one or more of the following:
- You have at least ten angels.
- There are angels who only complete four deals a year.
- For you, angels are approving cheques for less than $25,000.
- Close with one link: Get one URL where accredited operators and angel investors can make investments.
- Control the cap table: All investors will display as a single line on your cap table, and we can optionally proxy the voting rights back.
- Reduce admin costs: The one-time fee covers all filings, tax records, and distribution management for the duration of the RUV.