What are the differences between a loan and a nominee structure?
There are two types of investment structures that Funderbeam uses for syndicated investments: an SPV or a Nominee.
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.
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.
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 company investment offer page?
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.
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.
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.