In venture capital, high risks are only justified by high rewards. As an investor, you are participating from the companies’ value development. Naturally, the growth potential of a company is the higher, the earlier you invest – which also rings true for the risks. In terms of “yield”, you can compare it to a farmer cultivating a field of wheat.

At aescuvest.eu, we present to you companies that are still in an early stage of development, but the seed has already risen.This can be shown by comprehensive patent protection, clinical data, strategic partnerships with more established companies, etc., which to some degree indicates the validity of their business model.

Patience Is Key

Just like the farmer, you have to be patient for the field will not feed you as long as the crops are growing. The companies usually still generate very low sales or no sales at all, producing losses and negative cash flows. So you should not expect a dividend payout in the near future. If the company generates profits, it would rather invest in its future growth. Capital growth is what matters to a venture investor, not so much regular interest payments. It also means that you will hold your investment for an unknown period of time – three, five or even ten years. You don’t trade as you might do it with a stock market investment. You rather wait for the event when the company is about to take the next step. A new major investor steps in, it is sold to another company or it goes public. Then it’s harvest season. As your horizon should be longer than the one for the farmer’s growing cycle, so are your potential earnings. That said, in a worst-case-scenario a heavy storm can destroy the harvest and the yield.

But how exactly participate the investors and how earns aescuvest money?

How Investors Participate

The aescuvest.eu structure assures that investors will participate 1:1 with the value development of “their” company. The investment is realised via a special purpose vehicle (SPV) that raises its funds via the issuance of profit and loss participating certificates. It is initiated for a single target and will buy a stake in the start-up or growth company at a given valuation. The equity share is determined by the amount of money that has been raised in a successful campaign on aescuvest.eu. The SPV allows to bundle the shareholders and thereby reduces the administrative hassle for the company (or “target”). This greatly simplifies decision processes, e.g. when it comes to potentially difficult exit negotiations. The SPV, a ring-fenced investment, is represented by a trustee who will vote in accordance with a set of rules or ligated to a crowd vote that will be triggered for important meetings of the company’s course.

How Aescuvest Participates

Aescuvest receives a fixed fee based on the amount that has been successfully raised via the funding campaign. In addition, we collect an annual investor relations retainer for managing the communication between the company and the investors. On the very day the SPV sells its stake in the target, aescuvest benefits through a“carried interest” (or “carry” for short), very much like an investment manager. But only in the case that the annualized yield for the investor is at least 10 %.

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