Imagineering: A New Class of Company Shares
Neither Debt nor Equity “Silo” Capital is long-term and “patient”; an alternative to “depositing” “intelligent” funds with conventional Deposit Taking Institutions.? It does not seek to make capital gains via strategic growth nor aim for a regular income stream via the enterprise’s declared dividends nor seek to charge interest as if it were a “loan.”
Instead of “parking” wealth in global “trophy” assets, Silo Capital funds SMEs and MMEs sitting on the Balance Sheet in-between Equity and Debt Capital.? The aim is for a return of the “Principal” in “real” rather than in “nominal” terms – consequently it is index-linked to a pre-specified and mutually agreed inflation index.
The Company may use the capital provided as part of its growth strategy and funding stack, but commits to repaying the “Investor(s)” (Angel or Institutional) in “real” terms – either incrementally over an agreed period of time or after an agreed term via a single “balloon” payment.
“Silo” Capital sits on equal par with any Senior Debt (with regard to legal title/claim to the business and its assets – including subsidiaries) but will not interfere nor assist in the management of the business; however, for reasons of security reserves the right to remove the Senior and Middle Management Teams for maladministration, incompetence, outright fraud etc.
Such Capital is to be provided by professional investors to Companies that have a track record of at least 5-10 years, as an extra boost to growth and for greater peace of mind (for the Investor.)
Whilst the objective is to provide the Company with long-term capital, should it experience “hockey-stick” or “unicorn” growth then both Investor and Investee can mutually agree to “cash-out” sooner rather than later – either in whole or in part?
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Quite unlike conventional private equity and venture capital that demand high returns over a relatively short period, “Silo” Capital’s aim is to help grow the “real” economy and for, ultimately, a return of its invested capital but in “real” terms.
Further “bells and whistles” could be added by the Investor (on a case by case basis) to assist with medium and long-term corporate growth, such as Revolving Credit Facilities (but unlike conventional Overdrafts that are payable upon demand, these are not – being available for the medium-term.)
Semantics aside, there is no reason why “Capital” could not be provided by Investors in more innovative and creative ways?? Such “money” invested in any venture is always at risk but so can it be with any DTIs despite any assurances and official guarantees?? It is for the professional investor to use their judgement and to come to their own conclusion.? Sometimes you win and sometimes “Baby Blue” you lose…
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Kip
The EBO Guy
…Acquiring businesses for employees