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Chisos

Fast, flexible capital for great entrepreneurs. More reliable returns for investors.

Pitch Video
Investor Panel

Highlights

1
Addressing the $4T blindspot in startup financing by backing high-potential, overlooked founders.
2
Unlike banks, we evaluate founders based on future potential, not just assets & financial history.
3
Chisos’ Convertible Income Share Agreement uncaps equity upside for investors & flexibility for founders.
4
Wefunder investors receive 3X PREFERRED waterfall position for profit distributions.
5
Raised $550K pre-seed operating capital & $500K Fund I; currently raising $10mm Fund II.
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Developed platform with proprietary underwriting algorithm; automated application & diligence process.
7
200% online application increase in 2021; 10 completed investments to date.
8
Proof: ~$20K ISA repayments; Returning ~10% of Invested Capital to Fund I LPs in 2021 (est.).

Our Team

The idea of utilizing a person's future earning potential to secure funding seemed like a natural evolution of the capital markets. As I dove deeper I realized the magnitude of the problem. Current funding options fail 83% of entrepreneurs. There is an immense amount of talent denied the entrepreneurial path due to lack of access to capital.

Why Chisos?

Did you know that personal savings, credit cards, and family contributions make up 83% of all startup funding? Or that, according to a Morgan Stanley report, traditional VCs have a $4T blindspot when it comes to women- and minority-led businesses?

Chisos provides a unique source of alternative financing for overlooked and under represented entrepreneurs.

Your investment will help build the platform to connect great potential founders with capital.

Fewer than 23% of founders who receive VC funding are minorities, and only 2% of all VC funding goes to women-led groups. Meanwhile, new ventures can’t qualify for bank loans.

Chisos solved this problem by pioneering an innovative investment approach: the Convertible Income Share Agreement (CISA). The CISA purposefully combines the best features of two commonly known instruments, SAFEs and ISAs.

How? We receive an ISA from the founder and a SAFE in the founder’s business.

Founders get the capital they need to start and grow their business, and investors benefit from a de-risked approach with uncapped upside. Win-win.

We’ve raised $550K pre-seed operating capital, $500k in Fund I investment capital, and we’re currently raising $10mm in Fund II. More than 350 founders have applied for capital through our online app, (over 60 alone in March 2021), with 10 investments complete.

We developed a FinTech platform with our proprietary underwriting algorithm, as well as an automated application and diligence process to source, underwrite and service thousands of applications and hundreds of investments.

More individuals are seeking to start their own businesses; this translates to demand for new business funding of $3 billion+ per year in the U.S. alone. Millennials and Gen Zers are 188% more likely than baby boomers to have the aim of creating a side business.

New entrepreneurship will surge, and we’ll be there to meet the moment.

Our CEO, Will Stringer, has been featured in TechCrunch’s “12 ‘flexible VCs’ who operate where equity meets revenue share,” as well as on Angels and Entrepreneurs, S²TV and the Opt Out Life podcast.

We have ten (10) portfolio companies in our first fund, and two more in diligence.

Over 2/3rds of the portfolio companies are led by underrepresented founders. Our Investments in each range from $15K to $50K.

A third of the portfolio is already making regular ISA payments, and the first to achieve a Qualified Financing to reduce the ISA was Re-Nuble Inc. (in November 2020).

Our powerhouse team is backed by a world-class board of advisors with experience growing multi-billion dollar businesses. Including:

We’re making first money capital investing better for founders and investors.

Here’s how we’re founder-friendly:

  • When selecting investments, a founder’s financial background is only one—but not the sole—factor used to determine eligibility.
  • We offer flexible start-and-end ISA payback with an equity clawback option (up to ⅔), plus the 1X payoff cap with a Qualified Financing.
  • Founders also get a clean cap table, as the ISA obligation is decoupled from the equity (SAFE).

With Phase II underway, we are operating as an asset manager to get capital into the hands of entrepreneurs using our CISA funding instrument.

Phase III takes the FinTech infrastructure built and utilized by Chisos, and offers it to other entities and investors (universities, corporate innovation, municipalities & individuals) for their own early stage / CISA investing efforts.

Our end goal is to take the CISA global, enable undervalued entrepreneurs anywhere to leverage their own potential to raise that first investment check.

This outcome creates a global fintech organization with significant shareholder value.

There’s no better time than the present to invest with us! Income share agreements are gaining traction in the US, predominantly in the education sector. 2020 ended with over $500 million in ISA projections, which included the job training and philanthropy spaces, respectively. We fit perfectly within the current startup ecosystem, partnering symbiotically with upstream and downstream ecosystem players.

Over the next five years, we project tremendous revenue growth, both in terms of asset management and licensing/SaaS fees.

The latter category represents the bulk of those gains, with over 75% of a projected total of more than $45M coming from licensing fees in 2026.

In that same timeframe, we expect asset management revenue to double every year from 2024 to 2026, reaching the $10M mark by the fifth year. (NOTE: these figures are forward-looking projections that cannot be guaranteed.)

*This Investment Offering is Not a Fund

This offering is for convertible securities in Chisos LLC. Chisos LLC builds software and employs people to manage the operations and inform investment decisions of underlying fund and SPV capital vehicles. Chisos LLC is not a fund and does not invest in underlying assets. All underlying CISA investments are made from the fund vehicles managed and overseen by Chisos LLC. Accredited investors interested in learning more about our funds can email ir@chisoscapital.io.

Rather than investing in just one of our funds, investors in this Reg CF campaign will have ownership in the upside across all of our current and future funds (in addition to all upside related to our CISA Servicing software activities). The "upside" of a fund is known as carried interest or carry where the owners (or GPs) of a fund keep ~20% of the profits from a fund once investors get their initial capital back. Currently, Chisos LLC and it’s investors receive the carried interest from Chisos Capital funds. The diagram below shows how Chisos benefits from underlying asset management activities and CISA servicing software activities.

Chisos Convertible Note - Upon investing in Chisos LLC, Wefunder investors receive a convertible note with 6% interest that matures in March 2023. The interest on the note will build the value owed to the investor over the two-year period. At maturity OR at the time of a bona fide equity investment, the convertible note holder will be issued Preferred Units in Chisos LLC at a valuation equal to the conversion cap OR at a 10% discount to the price of the equity investment. The Preferred Units have a 3x preferred distribution feature which gives Wefunder investors preference with distributions compared to the Chisos team. For example, Wefunder investors receive 100% of their distributions back before the Chisos common unitholders receive any distributions. This 3x preferred distribution feature accelerates the timing of distributions and increases the IRR for Wefunder investors.

For more information, see our Investment Memo at the link below.


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