Profit-sharing on successful exit for accredited co-investors
Who can get accredited to co-invest
with the Fund?
The Fund can offer accredited private co-investors a generous profit-sharing scheme on successful exit, by limiting its return on investment to 6% compound annual interest, and all excess returns transferred to accredited co-investors in a specific startup company. The Fund and accredited co-investors sign a co-investment agreement, which regulates the profit-sharing scheme, the lead investor's role and incentives, and other relevant clauses.
Accredited private investors may choose to get listed on the Fund's website or have their names remain private and confidential. The Fund is sharing it's deal flow and startup applications with investors, that have expressed such interest.
A particular investment round may also include other co-investors on pari-pasu basis, that are NOT part of the profit-sharing scheme.
The Fund only co-invests, i.e. it does not accept contributions to the Fund's capital, and all co-investors invest directly in the startup.
The Fund also co-invests on pari-pasu basis (equal terms) with other co-investors. In this case, an accreditation is not required, just stardard KYC & AML procedures.
Role of the lead co-investor
In the absolute majority of investment cases, the Fund selects a lead private co-investor to represent the Fund in the portfolio company, including the Fund's voting rights. The lead investor may agree with other co-investors on an incentive upon exit, and has to obtain prior Fund's consent when voting on the most critical decisions, listed in the relevant agreements. The Fund expects a lead investor to take a pro-active role in supporting startup founders with his/her professional know-how and business networks, as well as ensure timely reporting by the startup..
The Fund may accredit private co-investors - business angels, their SPVs (special purpose vehicles), angel clubs or syndicates, private venture funds, endowment funds, corporate venture funds, family offices, and alike, as long as they do not have public money in their investment capital, are in full compliance with KYC & AML procedures and requirements and maintain impeccable reputation.
Accreditation is only required for the profit-sharing scheme. Co-investors on pari-pasu basis are only checked in accordance to KYC & AML procedures.
Private investors are accredited for the term of 2 years, which can be renewed upon submitting relevant information update. In case information was withheld or misled during accreditation and/or new facts took place afterward, accreditation can be revoked by a decision of the Fund.
Read more about:
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Key terms of co-investing with the Fund under a profit-sharing scheme.
Success story of Interactio exit
The first Fund's exit from a portfolio company is a true success story, illustrating the benefits of the Fund's profit-sharing scheme, aimed to strengthen the business angels ecosystem.
We have co-invested into Interactio with a group of private business angels and exited after 1 year, as the next funding round was of USD 30 million. Investment value has grown 9 times, however, the Fund only retained 6% compound annual interest and transferred all excess returns to co-investing business angels, increasing their return to 34 times.