used as a substitute for equity-like structures like a SAFE, convertible note, or equity. It is not debt, doesn't have a fixed repayment schedule, doesn't require a personal guarantee."
Oklahoma Shared Earnings Agreement (SEA) between Fund and Company is a legal arrangement that outlines the terms and conditions for profit-sharing between an investment fund and a company based in Oklahoma. This collaboration enables both parties to work towards a mutually beneficial relationship while sharing the risks and rewards associated with the venture. Under the Oklahoma SEA, the fund, which could be a private equity firm, venture capital firm, or an angel investor group, provides financial support to the company in exchange for a share of its future earnings. This agreement is typically suitable for startups and early-stage businesses seeking capital infusion and strategic partnerships to fuel their growth. The key components of the Oklahoma Shared Earnings Agreement include the percentage of future earnings that the fund will receive, the time duration for which the agreement is valid, and any specific performance metrics or milestones that need to be met for the partnership to continue. Additionally, the agreement may outline the governance and decision-making rights of both parties, and provisions for dispute resolution. There are several types of Oklahoma Shared Earnings Agreements, categorized based on their structure and purpose: 1. Equity-based SEA: In this arrangement, the fund receives a predetermined percentage of the company's equity ownership, allowing it to participate in the business's future value appreciation. This type of SEA is common when the fund believes in the long-term growth potential of the company and seeks an active role in its strategic decisions. 2. Revenue-based SEA: Instead of equity, the fund receives a predetermined percentage of the company's revenue until a specific return on investment (ROI) threshold is met. This type of SEA is characterized by a predictable income stream for the fund, making it an attractive option for both parties when the company has a stable revenue model. 3. Hybrid SEA: This agreement combines elements from both equity-based and revenue-based Seas, tailoring the structure to the unique needs and goals of the fund and the company. It offers flexibility in terms of risk-sharing and financial returns and can be customized based on their specific circumstances. Overall, the Oklahoma Shared Earnings Agreement between Fund and Company provides an avenue for businesses to secure the necessary funding without solely relying on traditional debt or equity financing options. While it allows the fund to diversify its investment portfolio, the company benefits from the financial support, expertise, and network of the fund to accelerate its growth and achieve its milestones.
