Payment alternatives on our non-dilutive program.
At 4thly, we are committed to providing a non-dilutive startup accelerator program. We believe that the 5-7% equity that legacy accelerators take is too much, given today’s startup valuations. Last year, the median seed-stage financing valuation was $9.1M – giving away 7% of that value to an accelerator is ridiculous.
So instead of equity, we charge a $4,500 program fee. Most of our participants feel we provide 10x that in value, with zero equity dilution.
We offer three alternatives:
- Pay the amount in full, and receive 20% off.
- Pay the amount over three months.
- Pay nothing now and enter into a Revenue Share Note agreement with 4thly.
What is a Revenue Share Note?
A revenue share note is like a loan, except that the payments are not based on interest. Instead they are based on a percentage the revenue of the company over time. The advantage to the startup is that the cash flow to pay the note comes from future operations, and there is no equity dilution. The payments continue until a defined multiple of the original investment has been paid (in our case, 1.5x the $4,500) and then the agreement terminates.
Here is the Term Sheet on the 4thly Revenue Share Note:
|Amount of financing:||$4,500|
|Type of Instrument:||Revenue Share Note.|
|Revenue Share Amount:||3% of company’s gross revenue from all sources, paid quarterly.|
|Payments begin:||90 days after the date of this agreement.|
|Payment Schedule:||Borrower shall make the Payments commencing from Initial Payment until such time as investor has received total payments in the aggregate of 1.5x the original investment, which term shall be no longer than the maturity date defined below.|
|Maturity Date:||2 years from the date of this agreement. Any amount remaining will be due and payable and the revenue share payments will terminate.|
|Use of proceeds:||Participation in the 4thly Startup Accelerator, and all associated benefits.|