EC launches new revenue-based investment fund
December 6, 2021
Last week, the Entrepreneurs’ Center launched the Rotunda Fund, a revenue-based investment fund for Dayton-area entrepreneurs and small businesses that are EC clients.
The first of its kind in the Dayton area, the Rotunda Fund will not require entrepreneurs to give up a percentage of their companies in exchange for capital. Instead, the investment will be paid back monthly as a negotiated percentage of sales over a period of five years or at a 2x return to the Fund.
The Fund is targeted for entrepreneurs who are not able to get a traditional bank loan but are on track to double their sales in the next two years.
“We see companies at the Entrepreneurs’ Center that don’t have friends and family who can invest, don’t have collateral, or are at their credit limit, but still need funds to grow,” said Kim Frazier, the director of growth initiatives at the EC and the Rotunda Fund manager. “This is the target company for our investment.”
Companies in the Rotunda Fund portfolio will benefit from wrap-around services provided by EC staff, with a strong focus on increasing revenue.
“This is more expensive than traditional bank financing,” Frazier explained, “but we expect it to be ‘smart’ money, an investment that benefits from the EC’s network and staff.”
An open-ended fund, the Rotunda Fund will close out its first year of fundraising at the end of 2021 with an expected $200,000 raised. It expects to make its first investments in 2022.
The Rotunda Fund invests in the EC’s client companies, including those that have used the Miami Valley Small Business Development Center (SBDC), portfolio companies of the Entrepreneur Service Provider (ESP) program, or small business innovation research companies that have participated in the Technology Acceleration Programs (SBIR TAP).
“We expect investments from the Rotunda Fund to be as diverse as the companies that we see at the EC,” said Scott Koorndyk, president of the Entrepreneurs’ Center. “From solo entrepreneurs to sophisticated research companies, our clients can sometimes struggle to raise capital, and we believe the Rotunda Fund can help bridge this gap.”
The EC will serve as the general partner of the Rotunda Fund, while local investors will be limited partners.
Qualify for investment
EC clients that qualify for investment will:
- Have a product or service that meets a proven market need as demonstrated through past sales;
- Have challenges accessing traditional capital;
- Have $100K-$500K in repeatable annual revenue with profitable gross margins;
- Be on track to double annual revenue in a 2-4 year horizon.
Become an investor
To be an accredited investor, a person must have an annual income exceeding $200,000 ($300,000 for joint income) for the last two years or a net worth exceeding at least $1M, not including personal residence.
Interested in investing? Contact Kim Frazier directly at [email protected].