I should clarify first that I haven't reproduced the following bug specifically with venv. I was asked to raise this here after raising an identical issue about virtualenv (https://github.com/pypa/virtualenv/issues/1154); a GitHub user told me this would also apply to venv. 

The bug with virtualenv is that it errors if passed a directory that contains a $ (dollar symbol). $ is a valid character for Windows directory names, filenames, and usernames. So running something simple like `python3 -m venv` (presumably) can fail in some valid Windows directories. 

The full error traceback for virtualenv is available at the above GitHub URL. A commenter in the virtualenv project (see https://github.com/pypa/virtualenv/issues/457#issuecomment-377159868) suggested that this happens because the directory path is passed as-is (with $) to distutils, and distutils is seeing the text following the $ as a placeholder and trying to replace it with a variable, which isn't found.

An exotic case, but it also affects Linux:

python3.7 -m venv 'at$test'
Error: Command '['/home/maier/at$test/bin/python3.7', '-Im', 'ensurepip', '--upgrade', '--default-pip']' returned non-zero exit status 2.
[maier@nb19 ~]$ mkdir 'at$test'
mkdir: cannot create directory ‘at$test’: File exists
[maier@nb19 ~]$ cd 'at$test'
[maier@nb19 at$test]$ bin/python -m ensurepip
Collecting setuptools
Collecting pip
Installing collected packages: setuptools, pip
Exception:
Traceback (most recent call last):
  File "/usr/lib64/python3.7/distutils/util.py", line 187, in subst_vars
    return re.sub(r'\$([a-zA-Z_][a-zA-Z_0-9]*)', _subst, s)
  File "/usr/lib64/python3.7/re.py", line 198, in sub
    return _compile(pattern, flags).sub(repl, string, count)
  File "/usr/lib64/python3.7/distutils/util.py", line 184, in _subst
    return os.environ[var_name]
  File "/usr/lib64/python3.7/os.py", line 678, in __getitem__
    raise KeyError(key) from None
KeyError: 'test'

During handling of the above exception, another exception occurred:

Traceback (most recent call last):
  File "/tmp/tmpppaapmyk/pip-9.0.1-py2.py3-none-any.whl/pip/basecommand.py", line 215, in main
    status = self.run(options, args)
  File "/tmp/tmpppaapmyk/pip-9.0.1-py2.py3-none-any.whl/pip/commands/install.py", line 342, in run
    prefix=options.prefix_path,
  File "/tmp/tmpppaapmyk/pip-9.0.1-py2.py3-none-any.whl/pip/req/req_set.py", line 784, in install
    **kwargs
  File "/tmp/tmpppaapmyk/pip-9.0.1-py2.py3-none-any.whl/pip/req/req_install.py", line 851, in install
    self.move_wheel_files(self.source_dir, root=root, prefix=prefix)
  File "/tmp/tmpppaapmyk/pip-9.0.1-py2.py3-none-any.whl/pip/req/req_install.py", line 1064, in move_wheel_files
    isolated=self.isolated,
  File "/tmp/tmpppaapmyk/pip-9.0.1-py2.py3-none-any.whl/pip/wheel.py", line 247, in move_wheel_files
    prefix=prefix,
  File "/tmp/tmpppaapmyk/pip-9.0.1-py2.py3-none-any.whl/pip/locations.py", line 153, in distutils_scheme
    i.finalize_options()
  File "/usr/lib64/python3.7/distutils/command/install.py", line 307, in finalize_options
    self.expand_basedirs()
  File "/usr/lib64/python3.7/distutils/command/install.py", line 486, in expand_basedirs
    self._expand_attrs(['install_base', 'install_platbase', 'root'])
  File "/usr/lib64/python3.7/distutils/command/install.py", line 480, in _expand_attrs
    val = subst_vars(val, self.config_vars)
  File "/usr/lib64/python3.7/distutils/util.py", line 189, in subst_vars
    raise ValueError("invalid variable '$%s'" % var)
ValueError: invalid variable '$'test''

So the venv actually gets created, but it's ensurepip which chokes on the $.

I found when this "feature" was implemented:
gitff2d9b71547d95566416fa968872910ca9c4adb1

Part of commit message:
```
in command-line options, and in two phases at that: first, we expand
'install_base' and 'install_platbase', and then the other 'install_*'
options.  This lets us do tricky stuff like
    install --prefix='/tmp$sys_prefix'
...oooh, neat.
```

So this was intentional change in distutils.

The only suggestion I have to fix this issue without break something in the wild is to suppress exception in Lib/distutils/util.py:189 and leave variable without available substitutions as it is. To be on safe side this can be even optional and disabled by default.

I am newcomer so some guidance will be helpful.

The same problem is reproducible with different but obvious way on Python 2.7.

Reproduced on 3.11.

Affects distutils, which is deprecated and won't be getting any more fixes.

I've migrated it to https://github.com/pypa/distutils/issues/63