> A unique aspect of the IdVC funding model includes the option of cash distributions to investors.
> Traditionally, technology investors only get their money out when you sell out (another term for this is a “Liquidity Event”). An investment from IdVC doesn’t preclude you from selling, but in the event you stay independent, our investment will get paid out as distributions from cashflow over time. This is fairly common in most other industries, but we have not seen it applied to technology companies until now.
Are distributions required? How are they structured? When do they start? How are distribution amounts determined? Does the founder have a say in any of this? The attractiveness of this program depends a huge deal on the answers to these questions so it's kind of surprising that interested parties are asked to apply before any detail about the distribution terms are disclosed.
Incidentally, as for the suggestion about novelty, there are a number of revenue based financing companies that are focused on SaaS businesses. They function somewhat similarly but usually without an equity component. The financing company provides the SaaS business with a loan. The amount and repayment terms are tied to the recurring revenue the business generates. Some of these are structured so that they function like a line of credit, and many can be paid off early without penalty.
> Traditionally, technology investors only get their money out when you sell out (another term for this is a “Liquidity Event”). An investment from IdVC doesn’t preclude you from selling, but in the event you stay independent, our investment will get paid out as distributions from cashflow over time. This is fairly common in most other industries, but we have not seen it applied to technology companies until now.
Are distributions required? How are they structured? When do they start? How are distribution amounts determined? Does the founder have a say in any of this? The attractiveness of this program depends a huge deal on the answers to these questions so it's kind of surprising that interested parties are asked to apply before any detail about the distribution terms are disclosed.
Incidentally, as for the suggestion about novelty, there are a number of revenue based financing companies that are focused on SaaS businesses. They function somewhat similarly but usually without an equity component. The financing company provides the SaaS business with a loan. The amount and repayment terms are tied to the recurring revenue the business generates. Some of these are structured so that they function like a line of credit, and many can be paid off early without penalty.