Fundnel works with companies looking to raise capital via a range of fundraising structures – including equity, convertibles, debt, and revenue sharing.
For more information, please take a look at the merits and features of each fundraising model below:
Equity
Merits
- Receive long-term funding from investors with no fixed time frame to return the principal amount of investment
- No ongoing interest rate
Features
- Increase the number of shareholders in exchange for investment
- Issue voting / information rights to all investors
- Shares usually carry an entitlement to dividends if and when declared
Convertible Bonds
Merits
- Ability to price the share at a premium compared to pure stock sale
- Lower interest rate as compared to pure bonds – a convertible could be a zero-coupon security
- Flexibility to structure the convertible based on maturity period, conversion premium etc, to achieve desired objectives of business owners
Features
- Delayed dilution of existing shareholders
- Interests payments to be made to investors at a pre-determined interval, except for zero-coupon securities
- Interest will typically be added to the value of convertible bond before conversion
Debt (e.g. bonds, term loans or working capital facilities)
Merits
- No dilution to existing shareholders
Features
- Interest payments to be made to investors at a pre-determined interval, typically every six months
- Principal has to be repaid to investors upon maturity of the bonds
- Financial covenants may apply
Revenue Sharing
Business owners agree to share a percentage of its gross revenue with investors
Merits
- No dilution to existing shareholders
- Flexible payments as a percentage of revenue
- Flexibility to cap the return to investors to either; a predetermined "investment multiple" on their investment is achieved, or a predefined duration in accordance with its associated terms (e.g. after a certain time frame)
Features
- A strong administrative process is required to track and fulfil pre-determined regular pay-outs
