B Round Investing Ideas
We are taking on a b round for a piece of commercial real estate(remodel) + a business venture inside of that real estate. We are trying to figure out some of the best ideas regarding how to pay out the money we receive and the terms. One idea we had was to do a 14% annual return over the course of 4yrs, paid out quarterly and then having the option to pay the loan down early if we have extra/available funds. Does this sound logical, should we follow a different methodology? This would come from existing partners as well as private funding.
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Quote from @Alex L.:
We are taking on a b round for a piece of commercial real estate(remodel) + a business venture inside of that real estate. We are trying to figure out some of the best ideas regarding how to pay out the money we receive and the terms. One idea we had was to do a 14% annual return over the course of 4yrs, paid out quarterly and then having the option to pay the loan down early if we have extra/available funds. Does this sound logical, should we follow a different methodology? This would come from existing partners as well as private funding.
It does but what vehicle / method are you using to raise the $. That will have an impact on it. If you are doing a reg d 506c with accredited, they will want a return that high, if you did something that allowed non accredited and accredited you might be able to offer a lower return. It also depends on flow of funds and the waterfall structure along with the risk involved.
