Startup Boards -- 3X in 3 Term Sheet Walkthrough

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The TEN Capital Early Exit term sheet includes a 3X redemption right, giving the investor the sole discretion over their right to 3X their investment at the three-year mark from the date of the investment. 

A redemption right gives the investor or startup a right to redeem an ownership stake in the company. 

The term ‘Investor Sole Discretion’ means the investor has the sole decision on taking the redemption right.

The company typically pays back in a lump sum or a series of monthly payments spread over 6 to 12 months. Since it can be a rather large cash outlay, some companies start escrowing money a year in advance.

If the company cannot pay, then a workout plan is negotiated. The terms of the redemption right give investors consent rights over the company’s cash expenditures.  

There’s an interest rate set in the note for ongoing accumulation while the funds are kept in debt form.  

The interest is not paid out but rather rolled into the equity amount should the investor give up the redemption right and go onto the company’s cap table.

In the event of an early exit, the interest payment continues till the debt is paid off. 

The returns are treated as long-term capital gains.

Startups using this structure include tech, healthcare, and consumer product goods with at least $500K of annual revenue.  

If the revenue is lower than that, the company is at risk of startup failure. If it’s above $500K, then it will most likely remain an ongoing business. 

If the company declares bankruptcy, then depending on the outstanding debt the company is holding, the investor could lay claim to the assets, which in most cases include the patents.  

There is also an opportunity to take over the business.  

Finally, it’s a tax return write-off.


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org 

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/  

For Feedback please contact info@tencapital.group   

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Music courtesy of Bensound.

On this episode of Investor Connect, Hall welcomes Ian A. Brown, Attorney, Appraiser, Florida Real Estate Broker, and Founder of Yield Coach.

Located in Jacksonville, Florida, Yield Coach is a real estate thought-leadership platform with both educational and investment concentrations.

Ian is an experienced and dynamic real estate professional. Prior to founding Brown Brothers Realty, Ian was a senior consultant at a commercial real estate firm specializing in valuation and real estate analytics. In addition to being a licensed real estate broker, Ian is also a licensed appraiser and earned his J.D. from the Florida Coastal School of Law. His responsibilities include investment sales, debt restructuring, tax appeal, buyer and seller representation, property valuation, highest and best use analysis, and tenant and landlord representation. Through his diverse and well-rounded experience, Ian is able to apply creative approaches to assist clients in reaching their investment goals, as well as navigating their real estate challenges.

Ian’s background and exposure are fundamental to the Yield Coach platform and will allow students to look at deal structures differently and close larger deals (at better returns) than most new investors would have achieved.

Visit Yield Coach at www.yield-coach.com and on LinkedIn at www.linkedin.com/in/yieldcoach/.

Reach out to Ian at ian@yield-coach.com and on LinkedIn at www.linkedin.com/in/ian-a-brown-esq-64a4236a. 

_____________________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org  

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/  

For Feedback please contact info@tencapital.group   

Please follow, share, and leave a review.

Music courtesy of Bensound.