Conversation: Structuring the liquidity for investors

This conversation is where you and your investors will get to calculations and nitty-gritty planning. While you don’t talk about the exit of the whole company anymore, you have to work with investors to define their “structured exit” or planned redemption of the investment. The idea here is to design the redemption in a way that is adequate for the phase(s) of the company and milestones and prognosed developments.

So, depending on the chosen instrument, this will be talking and calculating about how and when to repay investments, the flexible or variable redemption mechanisms as well as the best- and worst-case scenarios – and all of this while possibly taking into account different seniorities and liquidity needs of other stakeholders (e.g. founders, employees, nonprofits) as well. 

 

Possible conversation topics:

• Calculation, calculation, calculation – on both sides! 

• How do both parties envision the investor's exit from the investment? 

• Timing: When will investors need to see first and final repayments? What does your flexibility look like here? 

• Timing: How do the financial scenarios of the company look like and how does this fit the investors’ needs?

• What happens if the redemption plan does not work out as planned? 

• What is the hierarchy of repayment among  various investors and rounds?

• Is there an option to allow for certain investors with stricter timelines to have their investment redeemed earlier than others?