Hello fellow Visionary! Are you looking for founder-friendly flexible warrant Instruments, so that you can play The Sovereignty Game? Well you came to just the right place…
First, read about our FLEX Notes. If you haven’t understand those, then this might not makes sense. And we don’t want you to get lost! After all…
In the land of the blind, the one-eyed is king.
Introducing the FLEX Warrant
Originally Published on August 1, 2022 6:49 AM (EDT)
Hello from Stockholm!
To round out our arsenal of FLEX financial instruments that:
- allow us to express different views,
- invest anywhere in the cap stack,
- provide the best (mostly capital efficient) companies with capped upside financing,
- and provide their investors with liquidity (via Secondary ROFR, converting their existing cap stack into this framework),
- so that they can lower their cost of capital over time (and regain control, and minimize ownership of low value add investors)
... the Friday before I went on vacation I realized we were missing something.
How do these fit together?
- FLEX Notes: a capped upside convertible note instrument with indefinite maturity and zero cash interest that the company can buy back at a price set at some compounding rate (say 25%)... can convert into FLEX Shares at the same terms... comes with a Secondary ROFR, shares purchased from other investors are also converted into FLEX Shares...
- FLEX Shares: a capped upside share of equity that can be bought back at some set rate (again say 25%)...
- And now... FLEX Warrants: a high-risk, high-return, capped upside option that vests, liquidates and returns Y when some preset success condition X is met.
What were we missing before? We did not have a way of expressing a high-risk, high-reward bets, that were still capped upside and fit within our overall framework. The FLEX Warrant is our version of a moonshot bet on a company.
For example, scenario: a startup comes to you at T=1.
It is early stage or capital intensive or super risky for some reason.
T=2 is the uncertain middle - it could fail or it could succeed.