Reminds me a lot of the Indie Fund in the game space, but slightly more profit-centered (which is not a bad thing).
How did you settle on a 3-5x return cap? Are you planning to tune that over time? Did you consider a graded return schedule? I don't know if you've published your profit share or if that varies by deal, but I'm curious if something like 25% up until 100% recoup, 10% up to 200%, 5% up to 3-5x target would compare to a flat 10-15% or whatever.
As a point of comparison, I used a portfolio loan to buy a business to run as a side project. The debt service on ~$125k is variable but roughly $500/month. At time of purchase that was about 20% of net, but that number will go down as the debt is paid and revenue grows. If I pay it off in ~5 years the total debt service will be in the range of $20-$30k... BUT that means almost all net is going to pay down the debt vs reinvesting in the business.
I know you're targeting more bootstrappers who want to go full time, but if this type of funding were available for side hustle acquisitions I'd probably consider it pretty strongly instead of taking on a bunch of personal risk (even though the rewards for me become less on paper).
Yes, very much consider this our next product. Will build, measure, learn, iterate as we go.
> I used a portfolio loan to buy a business to run as a side project
It's a useful comparison but not apples to apples. There are a lot more capital options to fund an operating business (ie SBA loans, IRA loans) than starting a new one. We are focused on the latter.
Our financial model might be a good fit for acquiring co's but it's not our strategy. Happy to help if anybody else wants to give it a shot.
How did you settle on a 3-5x return cap? Are you planning to tune that over time? Did you consider a graded return schedule? I don't know if you've published your profit share or if that varies by deal, but I'm curious if something like 25% up until 100% recoup, 10% up to 200%, 5% up to 3-5x target would compare to a flat 10-15% or whatever.
As a point of comparison, I used a portfolio loan to buy a business to run as a side project. The debt service on ~$125k is variable but roughly $500/month. At time of purchase that was about 20% of net, but that number will go down as the debt is paid and revenue grows. If I pay it off in ~5 years the total debt service will be in the range of $20-$30k... BUT that means almost all net is going to pay down the debt vs reinvesting in the business.
I know you're targeting more bootstrappers who want to go full time, but if this type of funding were available for side hustle acquisitions I'd probably consider it pretty strongly instead of taking on a bunch of personal risk (even though the rewards for me become less on paper).