Say at the time of funding founders are paying themselves $100k salaries each. They can pay themselves up to $150k each (150% salary at time of funding or a market salary we establish with them at the time of funding if they're paying themselves way below market).
If they chose to start taking out more cash than $150k, that would be considered a distribution and the 80/20 would kick in until 2x our investment is returned. Then it flips to 20/80 until 5x is returned. Once 5x is returned there are no further distributions.
That said, they can continue to draw their $150k salary and reinvest in the business as long as they'd like without ever paying out a distribution.
Bryce,
This seems very interesting. I have been working on a Neural Network SaaS startup for awhile now, and I think my plans could align with this program. I just wanted to say thanks to you and OATV for trying this experiment. I think traditional VC's miss out on lots of opportunities where there is some consulting revenue early on in the company lifecycle to help build the business. I have high hopes that INDIC.vc and programs like it could help those sorts of businesses get going.
