HOW WILL NEXT ACT FUND DECIDE HOW TO INVEST ITS FUNDS?
The Company will be managed by the Members of the Company. Each Unit will have one vote.
The Company will act as an investment fund that provides angel capital investments, grants and loans. The Company will have an Investment Committee. The Investment Committee will vet investments, conducting initial diligence and interviews, with a particular emphasis on regional and women-owned and women-led companies.
If the Investment Committee of the Company determines that an investment by the Company in a Portfolio Company is appropriate, the Company will only make such investment if a majority of the Members who choose to speak on the matter indicate they are in favor of making an investment (referred to as the "Majority Member Approval", but see the Operating Agreement for additional detail).
WHAT WILL THE INVESTMENT COMMITTEE DO?
The Investment Company will vet investments by conducting initial diligence and interviews, with a particular emphasis on regional and women-owned and women-led companies. A Majority Member Approval will be required to approve the investments ultimately recommended therefore, no specific investments by the Company can be guaranteed; however, the initial investment strategy is that (i) 75% of investments (equity, grants and/or loans) will be geared toward women-owned or women-led businesses, and (ii) 25% of investments will be available for any business investment without regard to the gender of the ownership or leadership of the business. While this is an investment strategy that will help the Investment Committee in identifying potential investments, the Members will ultimately vote as to whether to select any of these investments options.
WHAT TYPE OF INVESTMENTS SHOULD I EXPECT THE COMPANY TO MAKE?
Our ability to achieve the Company’s investment objectives depends on a number of factors, many of which are beyond our control. Whether the Company is able to successfully invest in portfolio companies that satisfy our investment objectives depends on a number of factors, some of which are beyond our control, including, the availability of other attractive sources of funding, general business and economic trends, and competition with other similar Companies and funds.
WHO WILL RUN THE DAY TO DAY OPERATION OF THE COMPANY?
Yvonne Campos will serve as the President. The President will serve on the Advisory Committee, and may make recommendations to the Advisory Committee from time to time to elect other officers and make recommendations for other committees and/or committee membership.
WHAT WILL THE ADVISORY BOARD DO?
The Advisory Committee will help the President in an advisory role with respect to certain decisions as set forth in more detail in the Operating Agreement.
HOW MUCH CONTROL SHOULD I EXPECT TO HAVE?
The Company is member managed. A Majority of the Members (as defined in the Operating Agreement) will be required to approve a matter, with each Unit having one vote. Therefore, the ability to affect decisions within the Company will rest on the Majority of the Members in most instances. Day to day matters will be managed by the President, and certain matters will be initially considered by the Investment Committee. An Advisory Committee will also advise the President in certain matters. Therefore, you should expect that you may not and likely will not agree with each decision, but by becoming a Member you should be comfortable with the terms of the Operating Agreement.
HOW MUCH DO I NEED TO INITIALLY INVEST TO PURCHASE A UNIT AND WHEN WILL MY SUBSEQUENT CAPITAL CONTRIBUTIONS BE DUE?
A Unit will cost $50,000, with the initial payment for the Unit being $10,000, and four additional capital contributions of $10,000 due by April 21st each year that follows. Therefore, $10,000 is due upon subscription, and thereafter, $10,000 will be due within fifteen days of invoice in April 2018, April 2019, April 2020 and April 2021.
WHAT OTHER FEES SHOULD I EXPECT?
- An annual membership investment fee of $1,000 per Member will be paid to the Company and applied towards Company Expenses (as defined in the Company's Operating Agreement) during the term of the Company. The initial annual membership investment fee for Members who join after the fund’s initial close (April 21, 2017), may be reduced on a pro-rata basis at the discretion of the President based on the month the Member joins the Company.
This annual membership investment fee is initially intended to be paid by each Member, not each Unit; however, this annual fee may be assessed on each Unit by the vote of a Majority Member Approval (as defined above) or an amendment to the Company's Operating Agreement. Accordingly, a Member that purchases more than one Unit will pay an annual membership investment fee of $1,000 each year, unless and until this is revised to be a per Unit fee.
- Each Member who joins after the fund’s initial close (April 21, 2017), will pay an Interest Fee to the Company. The Interest Fee is calculated based on the month the Member joins the Company.
The Interest Fee is for the benefit a Member receives when joining the Company after the initial close and being able to participate in any future gains from investments made in portfolio companies and the Enova Fund prior to the date the Member joined the Company.
WHEN ARE THESE OTHER FEES DUE?
- The initial annual membership investment fee will be due at subscription. Subsequent payments will be due by January 31st of each year during the term of the Company. Therefore, $1,000 is due upon subscription, and thereafter, $1,000 will be due within fifteen days of invoice in January 2018 and each year that follows for the life of the Company, which has no specified termination date until one is determined by the vote of a Majority Member Approval (as defined above) or an amendment to the Company's Operating Agreement.
- The Interest Fee is a one-time payment due at subscription.
HOW OFTEN SHOULD I EXPECT DISTRIBUTIONS?
In general, distributions will be made to the Members pro rata in accordance with their Units. In addition, distributions for the sale of a Portfolio Company may be held in escrow and released only subject to the terms of any purchase or sale agreement.
WILL THERE BE REINVESTMENTS OF CAPITAL?
No. Profits from the sale or other disposition of an investment other than interim investments of excess cash will not be subject to reinvestment and, once distributed, will not be subject to recall. Distributions will only be made once any contractual obligations in connection with a sale have lapsed (i.e. escrowed pending any indemnification period lapsing).
HOW MUCH IS THE COMPANY TRYING TO RAISE?
The Company intends to raise up to $5,000,000 in the form of 100 Units, but cannot guarantee any specific amount of funds will be raised.
WHAT IF I MISS A CAPITAL CONTRIBUTION PAYMENT?
For the convenience of the Members, the total contributions are over five years instead of all up front. Therefore, there are consequences for failure to make a payment. Any Member who fails to contribute the full amount committed on a date that such amount is due (i) will be subject to dilution, (ii) will not be permitted to vote with respect to any matter submitted to a vote or consent and the results of such vote or consent will be tabulated or made as if such Member were not a Member, and (iii) may, at the discretion of the President, have her/his Units redeemed at a price of $1.00 per Unit (the "Defaulting Member Rate").
That being said, extraordinary circumstances may arise from time to time and the Operating Agreement addresses this. In extraordinary circumstances, such as those that would be set forth by federal mandate, the President may (in the President's sole discretion) waive a default in funding or capital contribution for up to eleven months or the end of such calendar year, whichever occurs first. A Member may cure such waived default during the calendar year by paying all amounts due and payable, with interest at a rate of 5.0% if paid during such available cure period. A Member may also withdraw and forfeit the Member's capital contribution.
WHAT ELIGIBILITY REQUIREMENTS DO YOU HAVE FOR MEMBERS?
We will only accept "accredited investors" under Rule 501(a) of Regulation D of the Securities Act of 1933, as amended (the "Securities Act"). Beyond that, this investment is only appropriate for those that believe in our investment strategy. As with any private investment, the President reserves the right to accept or reject any investment for any or no reason, and may revise eligibility criteria from time to time for new Members in consultation with the Advisory Committee.
WHAT IF I NEED TO TRANSFER MY UNITS? MAY I?
Units may not be sold, transferred or assigned without the prior written consent of a Majority Member Approval, which may be withheld in its sole discretion. No consent is required for permitted transfers. Permitted transfers will include transfers upon death or intestacy. Members who inherit the Units must execute a Joinder Agreement and agree to hold the Units subject to the terms of the Operating Agreement.
ARE THERE OTHER RESTRICTIONS ON TRANSFER?
Yes. Investment in the Company is a long-term commitment with limited opportunities to transfer the Units. No public market exists at the present time for any Units of the Company, and none is expected to develop. The Operating Agreement restricts the transferability of the Units, and failure to meet capital contributions in a timely manner can result in forfeiture of capital contributions and other recourse. Accordingly, an investor must be prepared to bear the economic risk of an investment for an indefinite period of time and treat the investment in the Units as a long-term commitment.
ARE THE UNITS REGISTERED?
No. The Units are not registered under Federal or state securities laws. Prospective investors must recognize that the Units are being offered and sold pursuant to an exemption from the registration requirements of the Securities Act and state securities laws and have not been approved or disapproved by the Securities and Exchange Commission (“SEC”) or any state securities commission. Neither the SEC nor any state securities commission has passed upon the accuracy or adequacy of the information provided to you. Accordingly, prospective investors cannot rely upon any regulatory agency’s review of the terms of this Offering, including the disclosure of risks and the fairness of such terms, and therefore must recognize that they do not necessarily have any of the same protection afforded by registration under applicable federal and state securities laws. Investors must judge the adequacy of disclosure and the fairness of the terms of the offering on their own and without the benefit of prior review by any regulatory agency.
The transferability of the Units will be further restricted by applicable Federal and state securities laws. The offer and sale of the Units was not registered under the Securities Act, and, therefore, the Units cannot be resold unless they are later registered or unless an exemption from registration is available.
WHAT COMMITMENTS DOES THE COMPANY CURRENTLY HAVE?
The Company will commit at least $30,000 each year for five years to the Enova Fund, a BlueTree Angel Fund. It is acknowledged by the Members that some of the Members of the Company may be the same investors (but not necessarily the same investors) as persons who invest in the Enova Fund, and any and all Members waive any conflict that exists or may arise as a result thereof.
While Next Act Members are invited to attend BlueTree Screening sessions as well as Member/Investor sessions for educational purposes, Yvonne Campos will provide one vote on behalf of the Next Act membership. Next Act Members are asked to RSVP in advance (via BoardBookit) to the BlueTree meetings. Please note: RSVPs are especially necessary for the Member/Investor sessions, as Next Act Fund Member attendance is limited to only 5-10 attendees.
CAN NEXT ACT FUND MEMBERS DO SIDE CAR INVESTMENTS WITH BLUETREE?
Yes. Next Act Members are permitted to engage in side car investments (a separate, individual investment made personally, outside of a Member’s Next Act account) in BlueTree Allied Angel and BlueTree Enova Fund Investments, according to any minimum investment requirements from BlueTree (currently $5,000 minimum). These side car investments are not limited to women-run businesses and are managed by BlueTree Allied Angels or the BlueTree Enova Fund.
I AM INVOLVED WITH OTHER INVESTMENT ACTIVITIES. IS THAT PERMITTED?
Yes, it is acknowledged that all of the Members will have other investments and some of the portfolio companies may be owned by one or more other current or future Members. There are no restrictions on the ability of the Members or the Officers of the Company to be involved with other investments, businesses, investment activities or investment vehicles. However, when voting on matters, Members should comply with the Operating Agreement if a conflict of interest arises.
ONCE I INVEST, WHAT TYPE OF INVESTMENT INFORMATION SHOULD I EXPECT TO RECEIVE?
The Company will provide tax return information to each Member. It will also send to each Member the periodic updates that it receives from any portfolio companies.
WHAT ELSE SHOULD I CONSIDER BEFORE INVESTING?
The Company will be treated as a partnership, and not an association taxable as a corporation, for U.S. income tax purposes. As such, the Company will not be subject to U.S. income tax and each Member will be required to include in computing her/his U.S. income tax liability her/his allocable share of the items of income, gain, loss and deduction of the Company, regardless of whether there are any distributions by the Company to that Member. Each prospective investor is advised to consult her/his own tax advisor as to the income tax consequences to such investor of an investment in the Company.
SHOULD I CONSULT A FINANCIAL ADVISOR?
Yes. This investment is highly speculative and involves a high degree of risk. Only investors that are able to lose their entire investment should invest. No independent opinion on behalf of prospective investors regarding the fairness of the terms of this investment has been obtained by the Company. Prospective investors will be relying on the disclosures set forth in these materials and on the business and investment background and their own experience and any advisors engaged by them as the basis for any investment decisions by them.