Fundnel offers a variety of fundraising structure – including equity, convertibles, debt, and revenue sharing – to cater to your needs depending on your type of business, stage of development, and fundraising objectives.
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
Convertibles
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
Interests 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 admin process is required to track and fulfill pre-determined regular pay-outs