What are the differences between a loan and a nominee structure?

Choosing the best legal structure for your fundraise and understanding the fundraising model before investing.

There are two types of investment structures that Funderbeam uses for syndicated investments: an SPV or a Nominee, both are financial instruments.

Loan structure

In short, in Loan Note Structure – an investor subscribes for a debt security in a special purpose vehicle company, which uses the funds to subscribe for shares in a fundraising company.

In making their investment, investors will subscribe to Loan Notes issued by the special-purpose vehicle (the SPV). The SPV then invests the collective principal amount of the loans in the investee company, based on the terms agreed in the relevant investment agreement. The SPV becomes the legal shareholder of the fundraising company. A unique SPV is created for each fundraising company that completes a funding round through the platform. The fundraising company will have only one new shareholder instead of all the syndicate participants becoming individual shareholders.

Nominee structure

In short, in nominee structure – an investor subscribes for a share in the fundraising company via the Nominee company. The shares in the fundraising company are held in custody for you by an entity belonging to Funderbeam group.

Investors make their investment in the shares of the fundraising company via the Nominee, which holds the issued shares on their behalf. Funderbeam acts as the Nominee shareholder in the interest of the investors, who are the beneficial owners of the investment.  Similar to the SPV, only the Nominee is listed as a shareholder of the fundraising company.

With the nominee, the investor receives the instrument specified during the investment round i.e including whether it is share units, shares, or convertible notes. In the case of an SPV structure, investors always receive a loan note that has the right to any proceeds that arise for the underlying instrument.

Information display on your investment offer page

Nominee Structure

Loan Structure

This is how the information will be displayed in the Terms section, it will reflect investor instrument, company instrument and as well as investment structure – what we discussed above.

Dividends

A company may or may not choose to offer dividends to its investors. Any proceeds that arise from dividend payments are passed through the investment vehicle to the investors’ wallets.  In the case of loan notes, such dividends would be treated as a profit from the loan. Depending on the respective investment terms, dividend payments may be subject to a carry fee, as specified in the respective Investment Agreement.

To learn more about the relevant fee structure, please refer to the Investment Agreement that is available in the documents section of the syndicate page.

Comparison

We aim to help lead investors and fundraising companies chose the best possible structure for their needs. As an introduction, you can see the main differences here:

Loan structure Nominee structure
Who holds the shareholders’ rights towards the fundraising company? (Voting, dividends) The SPV The investors
Who is the beneficial owner of shares? The SPV The investors
What do the investors receive in return for their investment? Notes representing the loan Units representing the shares
Which instruments are available? Equity and convertible Equity and convertible
What costs are incurred by the Fundraising Company for setting up the investment vehicle? Funderbeam fees + Capital requirement for SPV Funderbeam fees
How many additions are made to the Fundraising Company’s cap table? One single investment vehicle
Who is responsible for the information disclosure? Fundraising company
Who is responsible for the taxes from the investor’s side? Investors

⚠️ Disclaimer – This comparison is provided for informational purposes only and is subject to amendment, revision, and updating. No content of this presentation may be copied, distributed, published, or used in any way, in whole or in part, without prior written agreement from Funderbeam. Neither the information contained herein nor any further information made available in connection with the subject matter contained herein will form the basis of any contract. The exact terms and conditions of the engagement shall be agreed in a separate agreement.

The information about the investment opportunities profiled on this website is provided for general information and marketing purposes only and should not be considered an invitation or inducement to engage in any investment activity. Complete and comprehensive information about an investment opportunity is only available only to investors who have been approved by a Funderbeam group entity.

You should ensure you carefully read the Risk Disclosure Statement before deciding to proceed with any investment or transaction, including making a purchase of securities via the Marketplace. Funderbeam has taken steps to ensure that company and securities offering information is clear, fair and not misleading in accordance with its internal verification procedures. Funderbeam does not provide investment advice or any recommendation to invest. Any investment opportunity on this website should not be considered as an offer to the public and is not directed at or offered to anyone to whom it may not be so directed or offered, or located in a jurisdiction where it is unlawful to do so.

This page provides you with an overview of the services provided by different entities belonging to Funderbeam Group. In this page, we generally refer to the group as “Funderbeam”, “we”, “us” or “our”.

It is important to note that funds are raised, investments are made and trade orders are placed through three investment firm service provider entities: Funderbeam Markets AS (FBAS) (authorised and regulated by the Estonian Financial Supervision Authority under permit 4.1-1/212), Funderbeam Markets Limited (FML (authorised and regulated by the UK Financial Conduct Authority under FRN 794918), and Funderbeam Markets Pte. Ltd., (FB Pte) (licensed and regulated by the Monetary Authority of Singapore under Capital Markets Services (CMS) license CMS100863). FBAS and FML are MIFID investment firms.

A Funderbeam client (whether investor or company) is a client of the service provider and under the protection of the requirements of the regulator under which that service provider operates: An EEA client’s service provider is FBAS, a UK/ non-EEA/ non-Singapore client’s service provider is FML, and a Singapore client’s service provider is FB Pte.

The Marketplace is operated as an organised market by Funderbeam Markets Pte. Ltd., in Singapore as a Recognised Market Operator (RMO) under the supervision of the Monetary Authority of Singapore. FBAS and FML are Trading Members of the RMO’s Marketplace. Access to the Marketplace for EEA and non-EEA clients is only provided by and through such clients’ service provider (ie FBAS or FML). The Marketplace does not provide services directly to investors outside Singapore.

With respect to any securities or investments offered by a US domiciled Fundraising Company, by visiting this site you confirm you are not a US resident or US person (as defined in Regulation S of the U.S. Securities Act of 1933) and you understand and agree that you are not acquiring any Investments for the account or benefit of any such US resident or US person. No investment opportunity in a US domiciled Fundraising Company is directed at US persons.