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Previously, we introduced
the concept of flexible VC
: structures that allow founders to access immediate risk capital while preserving exit and ownership optionality. We list here all the active flexible VCs we have identified, broken into these categories:
-
Revenue-based
-
Compensation-based
-
Blended-return streams
Revenue-based flexible VCs
These investors are paid back primarily based on a percentage of revenues.
Capacity Capital
Chattanooga, TN-based
Capacity Capital
was launched in 2020 with a primary focus on the southeastern U.S. Jonathan Bragdon
, its CEO, describes Capacity as “a team of founders-turned-funders making non-dilutive, founder-aligned investments of $50,000-$300,000 in post-startup, post-revenue businesses planning to 2x revenues in 12-24 months. Investments are typically in exchange for a capped, single-digit revenue share and a right to equity under certain circumstances.
If the company sells or raises enough capital, the investment converts into an agreed-upon percentage of equity. If the company grows without raising additional equity funding, founders redeem most of the equity right, based on a pre-agreed return amount. With a portfolio that includes food, tech and services, the fund is industry-agnostic and focused on the overlooked and underrepresented with high-margin business models.”
Jonathan sometimes refers to their investments as “micro-mezzanine” because “mezz is typically structured as a contractual periodic payment, with some equity-like upside, but subordinate to other debt … so most lenders look at it like equity. But, it is typically shorter term with fewer control mechanisms than equity (i.e., not VC). I wanted [a term for] something similar (between debt and equity) but on an extremely small scale.”
In addition to a fund, the overall
Capacity
organization provides direct mentorship, consulting and connects founders to a broad network of talent, diverse forms of capital and existing resources focused on the post-startup stage of growth. The founders, LPs and venture partners have a long history in local startup ecosystems in the Southeast including LaunchTN
, The Company Lab
, CO.STARTERS
and several other regional funds and resources.
Flexible VC: A new model for startups targeting profitability
Greater Colorado Venture Fund
Greater Colorado Venture Fund
(GCVF) is a $17 million seed fund that invests in high-growth startups in rural Colorado using equity and flexible VC structuring.
A typical GCVF flexible VC investment is $100,000-$250,000 for up to 10% ownership, of which 9% is redeemable, with a sub-10% revenue share and 12-month-plus holiday period. GCVF specializes in providing critical support to founders based in small communities, while connecting them to an unfair network well-beyond their small-town headquarters.
GCVF is pioneering the future of venture capital and high-growth startups for all small communities. With Colorado as an ideal pilot community, the GCVF team (which includes Jamie Finney, a co-author of this article) has helped grow multiple staple initiatives in the rural Colorado startup ecosystem, including
West Slope Startup Week
, Telluride Venture Accelerator
, Startup Colorado
, Energize Colorado Gap Fund
and the Greater Colorado Pitch Series
.
Recognizing the need for creative investment structures in their Colorado market, they co-founded the
Alternative Capital Summit
, creating the first community of flexible VCs and alternative startup investors.
They share their learnings on flexible VC and pioneering rural startup ecosystems on the
GCVF blog
.
