Structured & Hybrid Equity
What this is: Instruments that blend equity‑like upside with debt‑like features. When to use: Cash‑flowing businesses or founders preserving control while buying runway. When to avoid: If covenants or cash drains block product iteration.
Tools & Structures
SAFEs / Convertible Notes
Speed and simplicity pre‑priced rounds; watch caps/discounts.
Redeemable Preferred
Founder‑friendly preferred with redemption features.
Revenue‑Based / Royalty
Repay from top‑line until multiple; non‑dilutive economics with cash impact.
Milestone/Performance Equity
Earn‑outs or performance‑based vesting from investors.
Key levers: Conversion triggers, caps/discounts, cash waterfall, warrants, prepayment.
Case studies: Inogen (royalty-based facility), ConvertKit (revenue-based financing).
Related: See Capital from Customers for customer prepayments, and Equity Capital Spectrum for traditional equity.
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