Angel investor John Landry has been telling anyone who will listen about a new term sheet he wants to write for high-tech startups. Revenue royalty is a financing structure often used to fund large-scale energy projects, in which investors take no equity, but instead draw a percentage of income until the company has paid off a pre-arranged return.
Venture capital is a relatively recent phenomenon that worked well in IT when there were relatively few sellers and a lot of buyers, Landry said. That dynamic is now reversed, and the VC model is no longer adequate for many investment opportunities.
“There has been no innovation in financing in 30 years. It’s the same term sheet that I looked at 25 years ago that I could see today. The only difference is, it’s a completely different marketplace,” Landry said. “Investors are demanding innovation in technology. It’s about time we get some freakin’ innovation in financing.”
To read the full, original article click on this link: John Landry's fix for angel capital: Get rid of the exit - Mass High Tech Business News
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