Your Financing Scenarios
This sub-chapter guides you through part 3) of your Finance Map. In this part, we aim to gain an understanding of the potential scenarios and conditions of your future investment structure that you want to present in your fundraising round. For all workshops, it may be helpful to get a workshop moderator and involve external perspectives. Also consider reading through a few case studies and examples for inspiration.
Before delving deeper into return or redemption scenarios, it is important to understand the factors that are important for you in the structuring of the investment. This varies greatly between companies and directly affects not only the financing scenarios but also concrete legal structures that are open to you.
Some examples of conditions include:
- I am looking mostly for a financing structure that is easy to understand and implement for investors. / I am looking mostly for a financing structure that is easy to understand for my users/ the crowd/ the community.
- Equity is no option for me as it doesn’t feel like the quality of capital that fits the company I want to build/ my values. / Equity is the only option for me as I want to ensure that investors have a direct share in the company.
- I need a financing structure that counts as equity in my balance sheet.
- I need to plan for only one (more) financing round. / I need to plan for multiple financing rounds.
- I absolutely need to ensure that investors don’t have any say in the company. / I absolutely need to ensure that investors can influence decisions in the company because I want to hear them.
- I need a financing structure that is possible for investment funds regulated by XY.
- I need a financing structure that allows for involvement of earlier investors.
- The financing structure needs to be tax efficient and that means xyz in my jurisdiction.
You see – these can be quite different. The conditions are not only determined by your wishes but also by technical or regulatory requirements.
- How involved do you want the investors to be?
- What type of partnership are you looking for?
- What rights do and don't you want them to have?
Here you design your suggestion for how the investor-company relationship should look like and what rights investors should have/ not have. Thinking about the deep dive into governance, which rights do you want them to have?
This is the base for Workshop A.
- What do you consider an approriate/ risk-adequate return for investors?
- Should the return for investors be fix (fix multiple) or flexible (depending on specific parameters of company)?
- What is the maximum that you could see the company being able to pay back in the future?
This is a big one for steward-ownership aligned financing, which is why we have designed a whole session and input around it. Drawing from the deep dive on return for investors, this deals with what you would consider an appropriate/ risk-adequate return for investors that is also something that your company will be able to pay (maybe also considering different scenarios) and how you would like to structure this return.
This is the basis for Workshop B.
- How do you want to pay back investors (redemption of investment at once or profit/revenue/cashflow-sharing)?
- Are you looking for fix or flexible (depending on parameters) repayment conditions?
- Do you need a grace period?
- Do there need to be preferences in the structured exit?
This is a big one for steward-ownership aligned financing, which is why we have designed a workshop just for this. Taking into account your financial scenario(s) and thought about return, here you structure how you want to go about paying back investors.
This is the base for Workshop C.