Targeted Investor Preferred Payback Structure
What is TIPPS?
TIPPS is a new system of organizing and financing a startup. It is flexible and gives preferential treatment to financiers while giving control to entrepreneurs and advisors.
Traditional corporate models of finance are inflexible and revolve around interest and control to be the same, thus having the expectation that financiers are in control and make big decisions for the rising company. The end goal is to sell the company and give the investors a large payout.
TIPPS is different. TIPPS allows investors to reap the fruits of their investment early on while giving entrepreneurs and advisors more control over the company. Larger investments get better payouts over time, which incentivizes a larger investment. At the start, financiers get the majority of profits. After a certain payout is reached, the owners obtain a majority of the profits. Instead of a buyout, this system is designed to keep the management team on board while investors get a good payout early on. It provides instant and generous payback for investors while owners maintain control and eventually get a large share of profits.
"Specifically designed for entrepreneurs who want to stay with their projects"
Owners don’t risk losing control when getting financed. They can run the business they want to, and once it is successful enough they reap the majority of profits. Advisors don’t risk a king/queen situation, and also get properly compensated once the financiers are compensated.
Instant payback, and more payback with a higher investment. Higher profit % at the start without having to worry about deciding things. The owners are incentivized to make money, as they do not get more profits until investors get properly compensated.