Startup Funding Espresso -- Payback Plans
Payback Plans Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Not every funded startup continues on the venture path to a high payoff from the sale of the business.\xa0 For those startups, investors using an early-exit term sheet can find a path out of the deal. There are several options for the startup to pay back the investors. The company can use a revenue share agreement. While the funds may not be available immediately for payback, the company can pay out of incoming revenue over time. This is typically 2-3% of top-line revenue and is paid monthly. In many cases, this will take more than a year to pay off. Other options include the following: The CEO can put the company up for sale and pay off the investors with the proceeds. The CEO can pay off the debt or assume the note with a personal guarantee. Other investors in the company can buy out the early-exit investors as well.\xa0 The follow-on investors can pay off the debt to remove the investors from the cap table.\xa0 The company could declare a dividend to the investors and pay it out over time.\xa0 The purpose of the early-exit term sheet is to provide the investor a path out of the deal. 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 For Feedback please contact info@tencapital.group\xa0\xa0 Please , share, and leave a review. Music courtesy of .