When do investors get their profits?
Each year the royalty payments will be disbursed to the members of the LLC based upon their prorated ownership after administration costs are deducted.
When an exit opportunity arises, the lead will advise the fund when to sell the syndicates’ shares. If there are any profits, they are then distributed to the syndicate investors.
In the case of an exit, CrowdFundConnect will only receive a percentage of fees for their administration services only after the investors have recouped their initial investment.
For example, if the company IPOs, the lead will decide when to sell the shares. If the company is sold for cash, CrowdFundConnect (CFC) would distribute any profits to the syndicate investors. If the initial amount invested by investors was $1 million, and the total distribution was $2 million, CFC would only receive a percentage for administration on $1 million ($2 million total less the original investment amount of $1 million). CFC would handle all administrative functions for closing including escrow services, preparation of tax forms, creation of closing statements and distribution of capital.
There are many other situations that are not considered here—in any case, the Canna Champion / fund lead advises the fund when to sell.
The syndicate fund, like all investors, is bound by restrictions with the company and can only sell shares in certain situations.