I’m a big fan of index investing as it’s a great way to reduce the cost of investing in publicly traded stocks and bonds. Index funds have less than 1% fees which compare favorably to some brokerages which charge 1% of assets under management or more.
In the startup space the cost of investing is also a big factor. Investing in VC funds often come with hefty fees including 2% for management and 20% of the returns. I’ve done revenue based funding but found the operational overhead can be expensive. Revenue-based funding requires monthly follow ups to calculate revenue and there’s the ongoing monitoring process.
At TEN we provide low cost tools for investing in early stage companies. First, we’re not a broker so we don’t charge carry or other fees on the investment. We charge a monthly retainer fee to the company raising funding.
Instead of the traditional revenue-based fund model, TEN employs a redemption right in a convertible note as a means of providing a liquidity event for the investor. This alleviates the bank account monitoring and constant calculation of revenue.
Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies
