Roll-up vehicle pitfalls: mistakes companies need to avoid

Roll-up vehicles (RUVs) are one of the most effective ways to simplify a crowded cap table and remove friction from future fundraising. Used well, they streamline investor communication, reduce admin, and make your company easier to back.

When used badly, they can introduce legal complexity, governance confusion, and hidden costs, which often surface at the exact moment you need speed and certainty.

This article is not an argument against RUVs. It’s a practical look at the most common mistakes founders make when setting one up, and how to avoid them. 

We’ve already explained the benefits of RUVs so now it’s time to show the flip side: what can go wrong if RUVs are rushed, poorly timed, or incorrectly structured.

By the end, you’ll know what to watch out for, and how to approach an RUV with confidence rather than blind optimism.

Why RUVs fail in practice 

Most RUV problems come from pressure, assumptions, or copying structures without understanding the trade-offs.

Vestd’s guidance consistently shows that founders rarely regret using an RUV, but they often regret how and when they implemented it.

The risks tend to cluster around three areas:

• Timing and sequencing errors
• Structural or legal oversights
• Cost and governance issues that emerge later

Each on its own may seem manageable. Combined, they can undermine the very simplicity an RUV is meant to create.

RUVs fail less because they’re flawed, and more because they’re treated casually.

1. Setting up an RUV too late

One of the most common mistakes is waiting until the cap table is already unwieldy.

Founders often delay because:

• The round ‘just needs closing’
• Legal work feels like friction rather than leverage
• There’s concern about changing structure mid-raise

The problem is that late-stage RUVs are usually harder and more expensive to implement.

By that point, you may be dealing with:

• Multiple share classes
• Different investor rights and expectations
• Historic documentation that needs reconciliation

RUVs are simplest when planned before the cap table becomes painful, not as a clean-up exercise.

RUVs work best as prevention, not repair.

2. Treating the RUV as admin

It’s easy to think of a roll-up vehicle as a tidy legal wrapper, something that sits quietly in the background once the paperwork is done. 

In reality, an RUV subtly reshapes how decisions are made, how quickly things move, and how aligned your investor group feels over time.

When founders treat the RUV as a purely administrative fix, governance questions often go unresolved. Who actually speaks for investors? How much discretion does the lead have? What happens if investor views diverge?

These questions don’t feel urgent at the point of setup. They become urgent later, usually when speed matters most.

Problems tend to surface when:

• Approval is needed quickly for a new round or strategic move
• Investors want visibility or reassurance during a wobble
• Expectations around voting or information rights weren’t explicit

RUVs succeed when governance is designed intentionally, not assumed implicitly. A clean cap table is only useful if decision-making remains predictable and efficient underneath it.

3. Choosing the wrong structure for your context

Not all roll-up vehicles are equal. The legal and operational structure you choose shapes everything from tax treatment to future fundraising flexibility, even if those consequences aren’t immediately obvious.

Founders often rely on templates or precedent without fully understanding whether the structure fits their specific situation. That can be risky, particularly in the UK, where considerations around SEIS/EIS, nominee arrangements, and regulatory boundaries matter.

The danger isn’t that the structure is wrong in isolation. It’s that it’s wrong for your stage, investor mix, or growth plans.

Issues tend to emerge later, when:

• New investors are looking into historic decisions
• You’re preparing for institutional capital
• Exit mechanics or conversions are scrutinised

Our experience shows that early structural shortcuts have a habit of reappearing as friction later on. A structure that works today can limit your options tomorrow.

4. Poor investor communication upfront

One of the most ironic RUV failures is when a structure designed to simplify investor relationships ends up damaging them.

This usually happens when founders assume investors understand the implications of an RUV without fully explaining them. Silence is mistaken for alignment, and early goodwill masks later confusion.

Over time, this can create friction when:

• Investors feel out of the loop
• Voting power becomes relevant
• Expectations around transparency differ

RUVs perform best when investors are brought into the rationale, not just the mechanism. 

Clear communication builds trust, and this trust is what keeps things moving smoothly when pressure increases.

An RUV should feel like a shared solution, not a technical manoeuvre.

5. Using an RUV when it doesn’t yet solve a problem

Finally, one of the quietest mistakes founders make is introducing an RUV too early.

In some cases, the cap table is still manageable, investor numbers are low, and governance is simple. Adding an RUV at this stage can introduce complexity before it delivers meaningful benefit.

This often happens when founders:

• Anticipate future problems that may not materialise
• Follow patterns seen in later-stage companies
• Assume sophistication equals readiness

Timing matters just as much as structure. RUVs tend to deliver the most value when they address a current bottleneck, not a theoretical one.

Sometimes, the most strategic move is waiting.

An RUV should respond to real complexity rather than pre-empting imagined chaos.

How to use RUVs without limiting future options

None of these pitfalls mean RUVs are inherently risky. They mean RUVs reward deliberate design.

The strongest setups tend to share a few characteristics:

• Clear timing rationale
• Thoughtful governance design
• Transparent investor communication
• Tooling that supports long-term management, not just setup

That’s why Vestd treats RUVs as part of a broader ownership and fundraising strategy.

Summary

A well-structured RUV quietly removes friction from every future raise. A poorly structured one quietly adds it.

The difference usually comes down to whether founders treat the RUV as:

• A checkbox
• Or a strategic ownership decision

An RUV decision is less about today’s cap table and more about tomorrow’s negotiating position.

If you want to explore whether an RUV is right for your company,  and how to structure it properly, book a call with Vestd. We’ll help you pressure-test the decision before it becomes expensive to reverse.