Our goal with Ampled is to create a platform that is 100 percent owned by its users—our artists, workers, and community—-not investors. It’s why we decided to become a cooperative instead of a standard Delaware C Corporation. However, cooperative or not, building any tech-enabled platform like Ampled requires real resources. It requires people, time, sweat—and money. In order to retain ownership for our community, we looked for investment vehicles that would allow us to deliver returns to investors—without giving them any ownership or control (above that of a normal member of Ampled).
Unsurprisingly, the idea of funding a startup while not giving investors equity or control is something that excludes us from many prospective investors. Because we don’t plan on having a priced round of fundraising, we are also excluded from most traditional startup investment vehicles like SAFEs and convertible notes. We are also largely disqualified from participating in the most common startup accelerator programs. More traditional funding sources like bank loans are off the table as well; a risky pre-revenue startup is not an attractive candidate for any kinds of commercial loans—even if we could personally guarantee them. Because cooperatives are for-profit enterprises, we are also largely disqualified from many sources of funding used by non-profit organizations.
What other options are there?
Thanks to a tip from Greg Brodsky at Start.coop, we started looking seriously at revenue-based financing, a way to raise money that involves an exchange of investment for a small percentage of top-line revenue, paid back to a capped return (typically between a 1.35x and 4x multiple).
Over the last several weeks, CUNY Law School has helped Ampled draft some custom revenue based financing investment terms that helped meet our needs. Below is an edited transcript of a conversation I had with Rafael Varela, an attorney from CUNY Community Economic Development Clinic about the development of these terms.