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

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

Last updated on March 16, 2023

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

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Loan structure

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. 

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Nominee structure

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.

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What instruments do investors get?

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.

How is the information displayed on the company investment offer page?

Nominee Structure

Loan Structure

This is how the information will be displayed in the Terms section. It will reflect the investor instrument, company instrument, as well as investment structure.

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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.

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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.

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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.

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

This page provides you with an overview of the services provided by different entities belonging to Funderbeam group. In the pages of this website, platform, and documents located on these pages (save to where referred otherwise), we generally refer to the group, which includes group of entities being direct or indirect subsidiaries of Funderbeam Ltd, including VBAS, VML, and VB Pte, as “Funderbeam”, “we”, “us” or “our”.

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 VBAS, a UK/ non-EEA/ non-Singapore client’s service provider is VML, and a Singapore client’s service provider is VB Pte.

The applicable Funderbeam service provider has, prior to the offering of the investment offer on its Platform, verified from public registries in reasonable levels of due diligence, notwithstanding the due diligence which is also performed by the Lead Investor where applicable, which will cover at the minimum: a. that the project owner has no criminal record in respect of infringements of national rules in fields of commercial law, insolvency law, financial services law, anti-money laundering law, fraud law or professional liability obligations in all jurisdictions where practicable for such checks to be conducted; b. that the project owner is not established in a non-cooperative jurisdiction, or in a high-risk third country as set out by the Financial Action Task Force (“FATF”), and/or other government directives in jurisdictions where Venturebeam is operating.

The Marketplace is operated as an organised market by VB Pte., in Singapore as a Recognised Market Operator (RMO) under the supervision of the Monetary Authority of Singapore. VBAS and VML 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 VBAS or VML). 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.