ReSeed's partnership model isn't a traditional equity stake. They take a 10% top-line revenue share from the operator's business in exchange for seed capital and, more importantly, the exclusive right (but not obligation) to fund up to 100% of the equity for future deals.
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Instead of a large upfront equity investment, strategic partners can use warrants. This gives the corporation the option to earn equity later if the startup achieves specific milestones, often through their joint partnership. This approach de-risks the initial investment and directly rewards successful collaboration.
A core, non-obvious value ReSeed provides its Limited Partners is radical standardization. By forcing all operators to use the same underwriting models and reporting formats, they solve a major analytical challenge for family offices, enabling true "apples-to-apples" deal comparisons across markets.
Lyft's deals with partners like United and DoorDash are structured as co-funded arrangements. Both parties contribute financially, ensuring they are equally invested in building durable programs focused on shared goals like customer loyalty, rather than a simple vendor-client relationship.
Initially, ReSeed expected to mentor operators with limited experience. However, by demonstrating its ability to reliably fund deals, the firm attracted highly experienced professionals from private equity and top MBA programs who were previously too risk-averse to join an unproven platform.
Investors in restaurants typically receive 70-80% of profits until their initial investment is returned. Afterward, this flips, and they retain a smaller percentage (e.g., 20%) in perpetuity. This structure prioritizes cash flow distribution over a distant, uncertain exit.
ReSeed's model is a heavy lift upfront but creates a powerful, decentralized deal sourcing machine. By backing numerous scrappy, local experts, they have boots on the ground in many markets, unearthing opportunities that a single, centralized acquisitions team could never find.
OpenAI plans to demand revenue shares from drugs developed using its AI and a cut of e-commerce transactions. This transforms its business model from a simple per-token utility into a complex, risk-involved partner in multiple industries, akin to a venture firm.
To de-risk value-add projects, ReSeed funds acquisitions entirely with equity. This avoids the pressure and risk of debt service during unpredictable renovation and lease-up periods. They only introduce leverage once the asset is stabilized, which has a surprisingly minimal negative impact on the overall IRR.
Though administratively burdensome, ReSeed intentionally includes a syndicate for small checks in its deals. This isn't for capital needs, but as a strategic marketing tool. It allows potential high-net-worth investors and family offices to experience the platform with a small "trial" investment before committing larger sums.
Granting a full co-founder 50% equity is a massive, often regrettable, early decision. A better model is to bring on a 'partner' with a smaller, vested equity stake (e.g., 10%). This provides accountability and complementary skills without sacrificing majority ownership and control.
