financial sponsor program 15 osc
TRANSCRIPT
Open Source Capital Provides a New Way For Private Equity to Invest in Single Assets
“Dequity Notes”
Innovative: a “paradigm shift,” in March 2015, the Securities and Exchange Commission (SEC) released final Regulation A+ rules under Title IV of the JOBS Act, paving the way for companies to raise up to $50 million from both accredited and unaccredited investors as an alternative to venture capital.
Quantified: Debt financing with profit participation built into the Note
Strategic: a structured process with risk management techniques that have been tested and tried by institutional lenders
Investor-Focused: dedicated to meeting investors’ needs and objectives
High risk-adjusted returns Quarterly payments 1099 income – no K1’s
Open Source Capital
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Our Unique Focus:
We form alliances with entrepreneurs and work off-line and on-line to negotiate deals for Financial Sponsors and Accredited Investors to co-invest with us.
Our Financial Sponsor model makes crowdfunding a collaborative and complementary effort. Instead of competing with Financial Sponsors, Angel Investors and Private Equity, our crowdfund investors are collaborating with them, leveraging the Sponsor’s capital while giving crowdfunding investors access to professionally vetted investments that they might not have otherwise been able to select.
We focus on “one-off transactions” utilizing Dequity Participation Loans to finance real estate and other cash flowing assets.
We have the systems and analytical framework to quickly formulate, structure and price Dequity Participation Loans.
We conduct hands-on, deep-dive due diligence, with boots on the ground.
We have the ability to quickly communicate our analysis and find funding solutions for our clients and our investors.
Open Source Capital
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The Funding Process
The Dequity terms are established and posted online.
Investors conduct due diligence online.
All loans have an 8% p.a. coupon interest rate.
All Notes have a revenue kicker that increases the IRR
Investments documents are reviewed and signed online
The Note is funded.
Participants receive quarterly payments
Open Source Capital
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5
Detailed Underwriting and Asset Overview• Project Description• Location / Maps / Site Plan• Photos • Site Visit – Notes and Observations• Competitive Projects
Appraisal
Open Source Capital
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Financial Modeling – Cost, Sales & Revenue Projections
Open Source Capital
Investment Strategy & Process
Selecting value add projects through a data driven opportunity evaluation
process
A structured process with risk management techniques that have been tested and tried by institutional lenders
Lending to the small to medium sized enterprise (SME) market that has been
underserved by financial institutions since 2008
Risk Based Pricing: Financial Sponsor determines financial objectives
Financial Sponsor determines rate
Financial Sponsor determines the LTC
Financial Sponsor receives a promote on each loan
Long-term Wealth & Income
Crowdsourcing Platform Overviewfor Financial Sponsors (Sample Transaction)
Investments from other accredited investors
$10mm Loan agreement with pooled funds
Financial
Sponsor $2mm interest (20%)
Expected Loan Income 15% $1,500,000 Net loan income $1,350,000 13.50%
less expenses-OSC $150,000 ROI
Net loan income $1,350,000 less CF Interest $918,000 11.48%
Loan Level ROI 13.50% Net to FSponsor $432,000 21.60%
Yield increase 44.00%
• The net outcomes in the above table include a 15% promote (see appendix)• Please see appendix for more information on the above investment scenario• Figures above are expected results and do not guarantee the outcome of any investment with Open Source Capital LLC
Levered increase from participating in the crowdfunded
platform
Revenue
Participation Note
Three Components of Our Superior Returns
Loans are underwritten to yield unlevered annual
internal rates of return of 12% to 25%.
Revenue from each loan/investment will be derived from fees, loan
interest AND participation in profits from investment.
A 15-20% Promote on loans
Higher
Yielding
Investments
AppendixYourCO, LLC SAMPLE TRANSACTION
(Loan program)
Income Loan funding
Loan Amount Loan $10,000,000
Origination (Paid by borrower) 1.00% $100,000 YourCO, LLC $2,000,000 20.00%
Platform/Loan Servicing 10.00% $150,000 Crowdfunding $8,000,000 80.00%
Posting/Marketing (PBB) 0.30% $30,000
Total expenses 2.80% $280,000 YourCO promote 15%
Loan Income 15% 0.18 $1,500,000 Net loan income $1,350,000 13.50%
less expenses-OSC $150,000 ROI
Net loan income $1,350,000 less CF Interest $918,000 11.48%
Loan Level ROI 13.50% Net to YourCO, LLC $432,000 21.60%
Yield increase 44.00%
• Figures above are hypothetical and target results and do not guarantee the outcome of any investment with Open Source Capital LLC (See disclosures)
Summary
Single transaction - Dequity Participation Notes.
Investors purchase a percentage ownership in the Notes and receive 1099 Interest income – no K1’s.
Quantified profit participation built into the note.
Hands-on due diligence, with boots on the ground.
Quick communications with senior management.
Solutions that accomplish both the borrower’s and the investor’s needs.
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Open Source Capital
Disclosures
DisclaimerThis presentation contains confidential and proprietary information to be used solely for purposes of discussion, to determine preliminary interest in establishing a business relationship with Open Source Capital, LLC. Under no circumstances is this presentation to be used or considered as an offer to sell, or a solicitation of any offer to buy any security. Any such offer may only be made pursuant to a prospectus, or other offering documents, meeting the requirement of applicable Federal and State securities laws. The information contained herein is in summary form for convenience of presentation. It is not complete and it should not be relied upon as such.
Sample Transactions, Target Returns, and Proforma Analyses Some of the information in this Presentation may contain forward-looking statements. Such statements can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” or other similar words. Target returns project future expectations, contain projections of results of operations or of financial conditions, or state other forward-looking information. When considering such forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Presentation. Although management of the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there are certain factors, in addition to these risk factors and cautionary statements, such as general economic conditions, local real estate conditions, or the weather and other natural occurrences, as well as, other risks and uncertainties, that might cause a material difference between actual results and those forward-looking statements. As such, this analysis may prove to be inaccurate because of the assumptions made by Management or the actual development of future events. No assurance can be given that any of these forward-looking statements and predictions will ultimately prove to be correct or even substantially correct.
