Startup Funding Espresso -- Early Exit Deal Structure
Startup Boards -- Early Exit Deal Structure Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Investing in startups is risky. One way to reduce the risk is to define the exit.\xa0 TEN Capital\u2019s Early Exit term sheet is a convertible note with a 3X in 3-year redemption right at \u2018investor sole discretion\u2019 to provide the investor an option for an early exit.\xa0 The investor receives 3 times their investment 3 years from the date of investment.\xa0\xa0 So, $100K in yields $300K out. A 3X return in year three from the initial investment yields an IRR of 44%.\xa0\xa0\xa0 \u2018Investor sole discretion\u2019 means each investor makes their own choice about continuing in the investment or not at year 3. If the investor takes the early exit, then a payment plan is worked out. There are several benefits, such as: Let's you define the exit for your investment since most startups raising equity funding cannot\xa0 Provides the option of short-term exit or long-term equity investment Gives the startup the opportunity to prove itself, and then the investor chooses between holding a short or long-term investment. Easier to implement than revenue-based funding \xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today. ____________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0\xa0 For Feedback please contact info@tencapital.group\xa0\xa0\xa0 Please , share, and leave a review. Music courtesy of .