What happens on an exit?
In the event of a company exit (the company is sold or goes public), investors are entitled to the amounts received pro rata to their holding (excluding permitted expenses set out in the relevant investment agreement). However, profit is not guaranteed at a liquidity event (exit).
Successful Exit with Profit
When syndicate exits successfully and in exchange receives the initial investment amount and profit, what happens first is any additional costs related to the SPV throughout its lifetime will be covered. After that, all current investors will receive the nominal amount of money per unit of the investment (Shares, Share units or Loan notes).
For example, if the initial investment unit price (from the primary market investment, not the secondary market trading) was €1 and you own 200 investment units of the corresponding syndicate, you are entitled to get back €200. If the company has generated profit via the exit, the residuals are paid as follows:
(i) to the Lead Investor at a previously agreed carry fee from the profit
(ii) to Funderbeam at an agreed carry fee from the profit, and
(iii) the rest is distributed between the investors on pro-rata basis.
Successful Exit without Profit
If the money received from the syndicate’s investment doesn’t enable the syndicate to pay out the nominal value of the investment, it is paid between the investors on pro-rata basis. Funderbeam and the Lead Investor do not receive any remuneration (carry fee). In such cases, the investors receive less money than the nominal value per investment unit regardless of the price on the secondary market at that point of time.
If the initial investment fails, the company goes bankrupt and closes the business, and the syndicate does not receive any money from the investment. Then the syndicate is liquidated and current investors do not receive any funds.
️Warning: Investing in early-stage and growth companies puts your capital at risk. Please read our Risk Disclosure Statement