Our Capped Return Model

If your an experienced investor, then there is no need to read this entire page :)

Our Investment Instrument: Convertible Notes

You will be investing in Convertible Notes. A convertible note is a debt instrument that, at a future date, can convert into equity (ownership shares) in our company. This offers a unique advantage: it provides the security of a loan in the early stages while also allowing investors to participate in our company's growth and upside potential when it reaches a significant milestone, like a future funding round.

Our long-term vision is to become at least a Public Benefit Corporation (PBC). This means that, alongside generating profit, we will be legally committed to creating a material positive impact on society and/or the environment. Investing in a PBC aligns your financial goals with a mission-driven approach, offering both potential financial returns and a measurable social or environmental impact.

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Our Cap Mechanism: Investor Choice

We believe in empowering our investors. When it comes to how your convertible notes will convert into equity, we are offering you the flexibility to choose the mechanism that best suits your investment strategy.

Option One: Multiple of Investment (Valuation Cap)

With this option, your convertible note will convert into equity based on a valuation cap. This means that no matter how high our company's valuation goes in a future equity round, your investment will convert as if the company's valuation was capped at a predetermined amount. This protects your downside by ensuring you get a favorable conversion price, even if our valuation soars significantly later on. It essentially guarantees you a certain percentage of ownership relative to this cap, regardless of a much higher subsequent valuation.

Option Two: Fixed Percentage (Discount Rate)

Alternatively, you can choose to have your convertible note convert at a fixed percentage discount to the valuation of our next equity financing round. For example, if you choose a 20% discount and our next round values the company at $10 million, your investment converts as if the company was valued at $8 million ($10 million - 20%). This option rewards early investors by allowing them to acquire shares at a lower price than new investors in a future funding round, reflecting the higher risk taken during the early stages of our company's development.

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Investor Participation Rights

Investor Participation Rights define the terms under which investors can participate in future equity financing rounds. This typically means that as an investor, you will have the right, but not the obligation, to invest additional capital in our company during subsequent funding rounds to maintain your pro-rata ownership percentage. This protects your equity stake from being diluted by new investors entering at later stages and allows you to continue supporting our growth.

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Investor Conversion Rights

Investor Conversion Rights outline the specific triggers and conditions under which your convertible notes will convert into equity. This usually occurs upon a "qualified financing event," such as a significant equity funding round above a certain threshold, or potentially at a maturity date if a financing event hasn't occurred. These rights will detail the conversion price, the type of equity you will receive (e.g., common stock, preferred stock), and any adjustments that might apply in certain scenarios.

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Investor Liquidation Preference

Investor Liquidation Preference dictates the order and amount of payout investors receive if the company undergoes a "liquidation event" (e.g., an acquisition, a merger, or dissolution). This preference ensures that in such an event, investors are paid back their initial investment, and sometimes a multiple of it, before common stockholders receive any proceeds. This provides a crucial layer of protection for your capital in the event of an exit that doesn't involve a traditional equity conversion.

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