Entrepreneurs

Frequently Asked Questions

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General

Loyal VC is a global venture fund, which invests across industries, using a unique gate stage investment process. Loyal believes that pitches are not a fair way to evaluate companies. Instead, Loyal provides monthly assistance and $1,000 cash payments during a pilot investment stage,in return for monthly reporting and equity in the company. Think of this like a free mini-accelerator program (or even better than free, since Loyal pays you).

The best companies in Loyal’s portfolio each month are offered a $200,000 investment, and the best of those are offered third and further rounds of investment. All companies, at any level, continue to benefit from monthly assistance, and Loyal’s network of 800+ global advisors and 300+ founders, for at least two years contractually guaranteed, and generally forever.

As outlined in this disclaimer, all answers are provided for general information purposes only.

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Loyal offers selected companies $1,000 per month in pilot funding, monthly mentoring for 2 years, and a ~40% chance at a $200,000 financing offer within 3-30+ months, with $1MM+ financings possible thereafter. In return Loyal asks for monthly reporting, and $10K in equity.

No. While the median time to funding is 10 months, companies have received follow-on funding after as few as 3 months, and as long as 30+ months.

There is no catch. Loyal has a new funding model, based on a ‘try before you buy’ approach, that lets us get to know each other. The ‘try’ offer commits you to getting to know us - and taking our money and services in return for a tiny amount of equity - nothing more.

No. Loyal is contractually committed to speaking with you monthly for at least 20 months over 2 years. And >50% of follow-ons happen after 10 months. Only the data payments stop.

Loyal’s offer is designed to be flexible, and is a good fit for all companies valued at <$10M no matter their maturity, industry or location. Loyal may be your future lead (and even only) investor if you are very early stage, or a small co-investor with useful introductions if you are later stage.

No. We negotiate the terms for later money later. You can accept or refuse then, as you wish.

Loyal is a generalist, cross-industry investor, so by necessity must be open-minded and flexible. All investment opportunities are compared on a risk-adjusted returns basis. It is very possible to make solid returns on a ‘non-venture' company, especially on a $200K investment.

Companies valued at <$10M are good fits: a future $200K can be a meaningful part of your next round, or useful bridge financing. Above, Loyal is typically not a fit, although we have been persuaded otherwise. Loyal has funded companies who already were approaching $1M in revenues and 30 employees. These companies still saw value in the Loyal offering.

No. Your goal is to get the $200K when you are ready for VC funding. To do that you want to enter Loyal’s pilot program now, so when you are ready, Loyal has done their diligence.

Loyal is an open-ended fund. Loyal doesn’t care if you exit. They simply care about optimizing financial returns. You could never sell and just pay dividends. That is fine with Loyal.

If you have been full time for four months (and qualify), you are not too early. If you are not full time, Loyal may sign paperwork and start mentoring, and will not make monthly payments under the Data Agreement until you start working full time.

No. Loyal is happy to fund you between rounds. If you start the Loyal process now, that starts the clock ticking on your diligence and means we can invest more when you raise.

This is a common reaction people have to new products, including new funding products.

As of April 2023, Loyal had invested in 306 companies (152 INSEAD, 138 FI, 16 golden keys), and made 87 second stage and 13 third stage investments. To then, Loyal had a ~80% acceptance rate on the pilot offers, and a 98% acceptance rate on follow-on offers.

Here are a number of videos of them speaking in their own words. And look at Loyal’s 98% follow-on acceptance rate. They must like us if they almost always make room for our money.

No. The Loyal process, with monthly payments, mentoring, and equity, results in intensive diligence on both sides. Loyal feels that ‘staying in touch’ won’t give you/Loyal enough diligence. Traditional VCs ‘stay in touch’. Loyal makes/asks for a (small) commitment to/from you.

No. Loyal, like many investors, requires due diligence before investing. The $10,000 stage is Loyal’s obligatory (and non-conventional) due diligence process. It cannot be skipped.

No. Loyal is in the business of making $200,000+ investments, not $10,000 investments. The $200,000 requires you to go through Loyal’s diligence process. A refusal to sign the agreements looks like a refusal to agree to the diligence needed to get the $200,000+.

Loyal offers a network of 800+ advisors, so you can present 0.5% of equity in your cap table to Loyal as ‘an advisor’. And no existing company, to our knowledge, has found Loyal to be an obstacle to further funding. Instead we have often helped, with introductions and references.

No. Loyal never says ‘no’ to investing, just ‘not this month’. And Loyal is an investor, not a charity. Why should they invest time to support you, to end up with no shares? Having said that, you can always make an offer to buy Loyal out. Loyal will be free to accept or decline.

Loyal is not a typical VC. To get their $200K you need to spend months in diligence, not just do a good demo day pitch. Loyal can’t put $200K in on demo day unless you take $10K now.

Yes, and likely less than you think. ‘Follower’ investors, who say ‘find a lead and I will invest’, care. They won’t invest alone anyway. Other lead investors, who by definition make their own decisions and don’t follow others, shouldn’t care. Followers will then follow them instead.

Not necessarily. You should take the initiative on following up with all investors, including Loyal. Silence may be busy people prioritizing their current portfolio over new deals. Reach out and take responsibility to push to resolution. And sorry in advance if we ever drop the ball.

They are different. And you can do both. You typically give an accelerator some of your shares. Loyal buys your shares at a market rate.

Yes. Loyal offers multiple special deals, including AWS and Google credits. Given the size of our portfolio, we are attractive for partners to offer special deals to, so we have many.

Loyal will hold monthly half hour advisory calls to support companies with all issues related to your business. You can advertise that as a formal advisor or not. Loyal will also refer you on to advisors to help you with specific issues, who may become formal advisors.

A board seat is not a condition for the pilot stage. Loyal may recommend one of its advisors for a board seat in later stages. That would be negotiated in a later round, at which point you would be free to say yes or no.

To receive the financing, companies need to sign (i) the Loyal Data Agreement, (ii) a Loyal (Investment and) Mentoring Agreement, and (iii) issue common shares or a SAFE/convertible debenture (provided by the company), or a warrant (provided by Loyal). There is a separate FAQ that covers the legal documents. It will be sent when you get a financing offer.

Who Qualifies

Loyal currently only offers funding to three types of companies:  

  • Founder Institute (FI) graduates recommended by their local program leader
  • Companies founded by an INSEAD alumnus
  • Companies given a ‘golden key’ by investors in the fund

For more information and to apply for funding, visit this page.

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Unlike most other VCs, Loyal is open to all stages, countries and industries (established, early or non-traditional) so long as you pass our other criteria, typically being FI/INSEAD grads.

Loyal has plenty of deal flow already through Founder Institute and INSEAD, so doesn’t need more. If your accelerator - or a friendly associated investor - becomes an LP it will get golden keys. If those are used to refer in great companies, Loyal will come back for more.

Loyal is founded by longtime FI local leaders and INSEAD grads, but is not an FI or INSEAD entity. FI and INSEAD have partnered with Loyal to help provide funding for their graduates. Note that Loyal will compensate FI and INSEAD as part of this partnership from time to time, based on how companies sourced from their programs perform.

Yes. You will just need to follow our process.

If an FI or INSEAD grad is the founder and major shareholder and is not working full time, we can consider the business. The $1,000/month payments will only start when they go full time in the business. If the FI or INSEAD grad is playing a supporting role only, then you don’t qualify.

Yes, we will consider it on a case by case basis. You will have immediate access to our advisor network and monthly support calls. Payments will only happen when you go full time.

Loyal believes that pitches aren’t a fair or accurate way to judge if a company will succeed. They believe you can only find out if a company is good through working with it over time. They look for high quality referral sources that have spent this time with you (or those willing to ‘put their money where their mouth is’ by buying you access into the fund).

No. In principle Loyal will offer investment to FI and INSEAD grads from all industries or countries. To date Loyal has invested in >50 countries, ranging from the US to Bulgaria, Nigeria, India, China, Brazil and Ecuador. There may be occasional restrictions put on Loyal, sometimes for legal or regulatory reasons, or because of agreements with Loyal’s own investors.

Out of the first 266 deals done by Loyal, 31% had woman CEOs (when funded) and 46% had CEOs of colour. Note that diversity, though tracked, is not an explicit investment criterion. Loyal believes that their process results in less biased (hence more profitable) investing decisions.

Yes. FI local leaders may refer selected graduates from past programs. We recommend sending (monthly) updates to keep local leaders informed on your company's progress.

As of September 2022, 30% of Loyal’s investing professionals and 40% of the team were women. Loyal has not tracked the diversity metrics of the fund’s 800+ advisors to date.

Loyal only invests $10,000 to start. They then focus funding into the companies that prove themselves. If a company does well, they don’t care how ‘unproven’ it was to start with.

Loyal gives ($100,000+) investors in our fund a ‘golden key’ to refer in a company. You could bring a new investor to Loyal who buys that golden key for you.

Have your local FI program leader contact Loyal at advisors@loyal.vc.

No. Loyal is looking for a good overall return on their portfolio. A $10M exit can still provide a good return if Loyal invested $200K at a good initial valuation. And since Loyal is an evergreen fund, they have no fixed deadline to return money to their investors.

Application Process

There are 3 ways into the fund: as an FI grad, an INSEAD grad, or an LP referral. In all cases, you must be working full-time on your business and own 10% or more of the shares.

If you wish to apply, please visit our Prospective Founderspage

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Talk to your local director (directors go here), or if you are in better contact with an FI headquarters person ask them, and have them contact Loyal on your behalf. Loyal will want access to your FI test and assignments (which may require you signing something), and an FI reference call. Your work will speak for you more than any pitch could.

No, that’s it. If Loyal wants anything more, they will arrange a phone call. If you don’t hear back in two weeks, ask your referrer to nudge Loyal.

You don’t need to. Each LP who invests at least $100,000 in Loyal has a golden key to add a company to our porfolio. Loyal believes if investors trust the fund with their money, Loyal can trust the investor to pick one deal. No pitch is required (to Loyal), just the investor picking you.

The company must have an INSEAD alumnus working, or shortly intending to work, full-time in the business, who owns more than 10% of the company.

Please email Loyal to express your interest, and send one paragraph that explains if and why you are an impact company. Our partner INSEAD student club (ISIF) will review this to decide if they will include you in their process, or if Loyal will lead the screening.

No. Loyal’s investors expect Loyal to protect their privacy and make their lives simpler.

This one hour online assessment is the same one that all Founder Institute entrepreneurs take, is developed by a team of social scientists, and is paid for by Loyal. You will receive details about your entrepreneur personality type after completing the assessment, as well as tips that may help you. Loyal hopes that you will also find this information useful.

Write a story/timeline with a couple of bullet points of what you accomplished in the company each month since launch. Provide context by listing resources (people’s time/money) invested.

A pitch deck often talks about the future, which is theory. The story of the company talks about the past and your accomplishments, which is reality. Putting this into a month by month bulleted story/timeline format puts your accomplishments into perspective for Loyal (and you).

References should be people who have followed your company’s story for at least four months, typically either as an early angel investor in, or as an advisor to, you or the company.

Send the name and a brief description/explanation of the references you are thinking of to Loyal who will confirm your choice/select two. When Loyal has confirmed, make sure the reference is good to speak, and then make email introductions between them and Loyal.

Loyal will send you an email with a link, so please look out for it, including in junk mail. You do not need to prepare for the assessment. See here to get a preview.

For non-impact companies, Loyal will do two reference calls. For impact companies, Loyal will do one reference call. The second will be replaced by an interview with the INSEAD Impact Investing Club student team, who will select you based on your initial paragraph.

Loyal will ask for three things: completion of an entrepreneurship aptitude assessment, a one page bullet point story on the development of your company, and two reference calls.

This will generally look like a standard VC pitch. The students will ask for materials such as a pitch deck to be sent before the meeting, then will set up a call to meet you and ask questions. The students run a monthly ‘investment committee’. We recommend you follow up promptly with them and ask when the next meeting is to keep things moving.

At this point, you do not get evaluated. We recommend that you consider doing the Founder Institute program, an open enrollment program that runs frequently. You can sign up at fi.co.

Loyal will ask to set up a call with you to discuss the above. You won’t need to prepare anything additional for the call, other than being generally familiar with the content of this FAQ.

Monthly Assistance

If you are selected to join the fund, you will receive monthly assistance from one of our founding partners or a venture partner. We do this to track your progress and stay involved while believing it is your right to ignore our advice. However, if you stop attending our calls during the Pilot Stagewe will stop sending you money.

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Here is Loyal’s onboarding FAQ. Check the first few pages for Loyal’s guiding principles.

One of the founding or venture partners at Loyal will become your regular monthly contact. Every few months you will have a call with another partner, so that the firm gets to know you. You may also have additional calls with one of Loyal’s network of advisors.

While a Loyal partner can still give general business support, this is one of the reasons that Loyal has a network of venture partners, advisors (and now entrepreneurs) around the world.

No. Loyal’s current entrepreneurs are split 30% Europe, 25% US, 20% Asia, 15% Canada, 5% Africa, and 5% Latin America. Loyal’s network of advisors similarly sits around the world.

Loyal has a growing, proprietary network of 800+ advisors to provide specialized support on most topics, as well as 300+ entrepreneurs. Loyal may recommend, or you may ask for, support from an expert on a specific business problem, industry or geography. They are listed in a (private) Airtable database (advisors) or Google sheet (entrepreneurs).

If your company does well, Loyal shares any money they make with advisors who helped you. You will be asked to rate each advisor, yearly, so that the compensation can be done fairly. Entrepreneurs who wish can officially become advisors so their help is also recognized.

You can get up to 10-20 hours of help from each advisor without charge. After 10 hours with one person you should - and after 20 hours you must - consider compensating them directly.

No. The 10-20 hours is per advisor, not in total. Note that all advisors opt in to each interaction with you, so it will depend on their availability and willingness. And you probably have better things to do with your time than interact with more than 2-3 per month.

Loyal will be an advisor, providing mentorship through video calls and emails, and helping provide accountability. In working with and providing monthly reports to Loyal your company will get set up for successful future fundraising, either from Loyal, other investors, or both.

The best way for Loyal to prove it can help you is by doing it, month in and month out. That is the point of the pilot: you and Loyal are evaluating each other. Loyal builds the network to support the companies it has. If you need specialist help, Loyal will look to add it.

Many Loyal advisors are also FI mentors or INSEAD grads. Feel free to use your existing FI or INSEAD networks directly. You can also ask Loyal for help to tap into these networks, including by possibly adding specific people to the Loyal advisor network, which would allow those people to be compensated for time spent supporting you.

Loyal develops a custom monthly reporting template for each business, in partnership with you, in the first onboarding call. This template can change over time as your business does. Also, over time, you will be asked to prepare and assemble basic data room information that all investors would require, including a cap table, contracts, financial forecasts, patents, etc.

Reports include standard financial information (e.g., revenues, expenses, cash on hand), and customized performance data (e.g., percent of users signing in weekly, percent of requests filled, cost to acquire a customer). In some cases founders share documents such as a screenshot of your latest dev plan or sales pipeline.

You don’t receive the monthly payment ($1,000) in any month that you don’t submit a report as required. Loyal is there to help. As experienced board members like to say, ‘no news is bad news, bad news is good news, and good news is no news’.

Loyal is contractually obligated to support you for at least 20 months. Loyal also understands that ultimately successful companies sometimes go through periods where they struggle. This is an opportunity for Loyal to show you their loyalty, by standing by you when times are tough.

The mentoring will typically be done over video conferencing, except in those cases when you are referred to a Loyal mentor who is based in your city and both of you want to meet.

Companies are encouraged to participate in other funding assistance or mentoring programs, including the FI Funding Lab, in addition to any funding and support you receive from Loyal. Loyal wants to see you succeed, and it doesn’t matter to them how it happens.

Pilot Stage

Loyal’s gate stage process starts every company at the same $10,000 Pilot Stage investment. We make 6 new pilot investments every month and each month the top 2% move to the next stage

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No. It is up to you to accept or decline the offer. Note that without the $10,000 you will never qualify for further financing.

Loyal is effectively doing due diligence on your company for a $200,000 follow-on investment, which takes multiple months. Loyal recognizes that supporting due diligence takes time from you, so they limit the monthly time demands, and pay you for spending the time.

The offer is $10,000 per company, paid as $1,000 per month over 10 months.

No, you do it at the start. Loyal signs two contracts with you. One is a data contract where you are paid $1,000 a month for 10 months for data. The second is a mentoring contract. You issue the same $10,000 worth of equity, on signing, that vests over 20 months in return for mentoring. There is a detailed FAQ that accompanies the contracts that gives more details.

No. As you can imagine, that’s not a good business model for Loyal.

Loyal signs agreements in local currency where appropriate that convert to ~USD$10K.

Loyal will pay your company $1,000 per month beginning upon your signing of the appropriate agreements and commencement of reporting. You will be paid monthly each month in which the reporting obligations are met, until you reach your maximum, e.g, $10,000.

If you are interested, and ask for an extension within the 30 days, Loyal can give you an added 15 days to make the decision. Note that the pilot acts as a due diligence period for both Loyal and you. It gives you months of working with Loyal, to allow you to make a far more informed decision on whether you want the fund as a significant investor and partner. This pilot is far better than any diligence you (and Loyal) can do in advance of signing.

There are over 1,000 Founder Institute and INSEAD grads who start businesses each year. If you don’t want the offer, others will. The $10K has a small impact on your cap table, so 30 days should be sufficient to review the materials and make such a low-impact decision.

This offer should not affect any funding. Loyal will help you prepare for external funding. In fact, Loyal funding your company may even encourage other investors to participate.

No. Loyal will fund FI or INSEAD companies anywhere in the world. In the long term you may find US, UK, Estonian or Singapore incorporation to be an advantage. And it is not necessary.

You can always stop reporting to Loyal at any time. This will cause you to skip this month’s payment. You can also cancel the Data Agreement or Mentoring Agreement at will on 60 days notice. Loyal will continue to hold the equity, so long as Loyal continues to offer you mentoring as outlined in the Mentoring Agreement, even if you cancel the agreement.

Loyal will stop the monthly payments when your company ceases active operations. Loyal will suspend the monthly payments during months you are not working full-time on your company, or do not provide the required monthly deliverables.

Loyal is required to make payments according to the terms of the Data Agreement, and the only circumstance where it will not make the payment is where a company does not comply with its obligations. For example, if you don’t fill in the previously agreed report, don’t share the documents or other information requested that month, miss a call, or stop working full time.

No, you can still earn the monthly payment in a later month (i.e., in month 11 or 12). Loyal will make the payment for each month in which you provide the required information, until the maximum outlined in the contract is reached, e.g., $10,000.

If Loyal does a next investment, some of the new investment may also be paid monthly for reporting. If not, Loyal won’t pay more than the $10,000 outlined in your contract.

Once the maximum payment has been made, you will no longer be paid to report, and are not legally required to continue reporting. However, Loyal hopes you will continue to provide monthly information. It will help Loyal advise you better, makes it easier for Loyal to make a potential next investment, helps you reflect on your progress in your business, helps keep you accountable, and is a good practice for companies to follow with all their stakeholders.

Although Loyal pays for the data, as part of their due diligence process, you are welcome - and may find it useful - to share any reports sent to Loyal with all of your investors. Investors who know more become better advisors, and often provide more follow-on funding.

If you continue to work full-time on your business, and report, Loyal will keep making the payments, whether you are doing poorly or well.

Loyal intends for the reports to take no more than 2 hours of your time each month, and the information that Loyal requests is basic information that you would need to know to build your business in any event (e.g., monthly accounting). That means Loyal is effectively paying you $500/hour for reporting what you may already be doing. If you take longer than 2 hours to fill in the Loyal reports let Loyal know, as you may not be completing them correctly or we can help. If the reports are not a priority for you and you have more valuable uses of your time, you are free not to do them – you will just not be paid the $1,000 for that month.

No. If offered an uncapped note a rational investor should wait until the next funding round to get almost the same terms at much less risk (the probability you will fail to reach the next round is almost certainly much higher than your discount rate). Normally only irrational investors, often friends, will waive the cap. Loyal recommends not taking advantage of them (or us).

Yes, the amount is negotiable. For recent Founder Institute graduates, the amount will typically vary from 0.5-1.5%, based on your traction, team and product, though even outside this range may be fine. A good rule of thumb would be to compare $10,000 to a fair market valuation of your company, so a company valued at $5 million would give up 0.2% in equity.

Loyal insists on receiving a minimum of 0.1% of the shares, to ensure advisors are fairly compensated. If you are valued at >$10M and choose to give Loyal 0.1% of the shares under the mentoring contract, while only receiving $10K in the data contract, that is acceptable.

Traction Stage

We make 2.5 Traction investments every month and each month the top 2% move to the next stage.

Companies take a median time of around a year to rise to the top 2% in their stage and hence move on. And progress is merit based. It has taken companies as few as 3 and as many as 40 months to move on. This flexibility to pick purely on merit is possible only because of our open-ended structure.

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As of September 2022, Loyal had made 81 second stage investments out of 266 pilots (30%). Since Loyal adds 6 companies per month to the portfolio, and makes 2.5 second stage investments per month, 40% of pilots will ultimately receive second stage investments.

Yes. The $10,000 pilot investment and minimum waiting period of three months is the due diligence process required by Loyal to consider a larger investment.

No. It will be an offer, which you are free to accept or decline.

If Loyal is the lead investor for the next round of financing, Loyal will prefer to invest $200,000 in common stock at a fair market valuation, to fully align Loyal’s and the founder’s interests. If another investor leads and sets the terms, Loyal will participate at those terms.

In the second stage, Loyal will invest no more than $200,000. Loyal will sometimes invest less, with an intention (but not a guarantee) to put in the rest over time. To raise more than $200,000, you need to move to the growth stage. You also must take the full $200,000, in one or multiple investments, in order to be considered for the growth stage.

Yes. Loyal welcomes co-investment from other funds or other individuals.

Loyal partners sit down monthly to review, discuss and rank the full portfolio. On that one day they take off their ‘helpful mentor’ hats, put on their ‘hard-nosed investor’ hats, and decide which companies to fund based on ranking and cash available. If they want to offer you funding that month, they will reach out to you, whether you are currently fundraising or not.

Loyal does not promise contingent future funding. All investors want to be free to invest in the best opportunities in front of them. Pre-committing would take away their freedom to choose.

Three things that you can control matter: (i) your performance, (ii) Loyal’s knowledge about your performance, and (iii) Loyal’s confidence in their knowledge around your performance. Sending updates and having calls, month after month after month, builds Loyal’s knowledge and confidence. The factor out of your control is how other companies at your stage perform.

Loyal has an internal rule to eventually fund 40% of pilot companies, and many factors are considered. It is common for good companies to miss their targets, lose team members or encounter other troubles. If you prove you are consistently able to overcome obstacles and keep moving your company ahead that can be seen as top behaviour.

Loyal is happy to either lead or follow financing rounds.

Loyal will look at a number of factors in evaluating performance. This will include both hard factors such as financial and operational metrics, and soft factors such as team dynamics.

Loyal’s 2.5 companies/month rule translates into being in the top 2% of Loyal’s pilots that month. Many factors are considered, so they can’t give you a specific target. Factors that help include revenues, significant contracts, a good CAC to LTV, user engagement, tech success as well as continual progress.

In the first 81 follow-ons, sales was the dominant factor around 60% of the time (revenues for B2C; signings and channel partnerships for B2B). The other 40% was split between impressive user metrics, validation of exceptional technology, and remarkably consistent progress.

Yes. In one case, Loyal made an investment offer 48 hours after a monthly update call. The company had been in the portfolio for 7 months, making slow and steady progress, and had just signed a new channel partnership expected to >10x the company’s sales.

It makes no difference if you ask for money or not. You should of course tell Loyal what is going on in your company, including whether you are fundraising. As advisors, Loyal will do their best to help you, including often giving you advice on how to raise money from other people.

Yes. When ranking investment opportunities, Loyal looks at both the upside and the cost of investing. It is possible that you may have other lead investors that set a valuation that reduces the expected return from the investment below Loyal’s other opportunities, in which case Loyal could pass on the round even if they like your prospects.

Loyal prefers to invest in common shares, to make it impossible for Loyal to make money without the founders making money. If someone else is leading, Loyal will follow the terms set by the lead investor.

Loyal has a strict internal rule to only invest in the top 2% of its portfolio each month. If you are not in that top 2% Loyal will not be able to invest.

Loyal’s target is to invest $200,000 in 40% of the companies that get $10,000. Loyal compares portfolio companies globally. There is no time limit on Loyals next stage of investment: Loyal has sometimes taken as much as 40 months to follow on.

Companies will be eligible to be considered for the $200,000 investment as soon as 3 months after the start of the $10,000 investment. The median time to offer to date has been 10 months. And companies have been funded in as few as 4 and after as many as 40 months.

No. Half the time it takes longer than ten months. Loyal will compare you to all other companies at the same financing stage every month. Whenever you, in their opinion, clearly fall in the top 2% of companies at that stage, you will qualify for a follow-on financing offer.

Loyal knows investors who promise follow-on staged investing can have circumstances change, or just get distracted by the next hot deal. Writing this as an option makes it clear to you that the second part is uncertain. In around 80% of cases Loyal exercises their option.

Yes, you will be, as outlined in the Growth Stage Investments section.

No. Loyal will sometimes invest $100,000 or so, with an option to top with the balance, typically within three months. Loyal never invests more than $200,000 at this stage.

Loyal will make their decisions on the information available to them. If you refuse to share specific information, Loyal will wonder why. The logical answer is typically that you are trying to hide negative information. Loyal may still decide to invest if they feel the positive factors in your business outweigh the (perceived) negative.

Growth Stage

Loyal makes one Growth Stage Investment per month. Loyal’s gate stage strategy is designed to, and consistently has delivered excess returns relative to the market.

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As of May 2022, Loyal had made 13 Scale Stage investments. Loyal has an internal target to make one scale stage investment each month. Again, this works out to the top 2% of active traction companies. In the long term 40% of companies (1/month of 2.5/month) should move on.

No. Loyal has strict internal rules to follow the same process for each financing round, including at least three months between rounds, and fixed investment amounts at each round.

Yes. The $200K investment and minimum waiting period of three months after that investment is the due diligence process required by Loyal to consider a $1M investment. The same process applies to subsequent investments as well.

Yes. When Loyal feels you are ready for the $1M, they will invest immediately, whether or not other investors are taking part. If at least three months pass before the round closing and you are in the top third in the $1M cohort they could even invest the next $3M in your close.

No. Loyal does not have ‘dry powder’, since it is an open-ended fund, that re-prices and raises new funds quarterly. Loyal cannot predict its future cash. The fund takes care to not promise funding to its companies until and unless it has the money in the bank.

Yes. Loyal anticipates to continue to invest in its portfolio companies using a similar approach of following on in the top third of the portfolio companies at any stage after a median of ten months. The next three round amounts are $1MM, $3 MM, and $8 MM.

Founder Institute

We have signed partnerships with INSEAD and the Founder Institute that give us preferential access to high potential, pre-filtered, early stage entrepreneurs globally.

Founder Institute keeps us accessible to entrepreneurs from all walks of life, who are tested over 15 successive up or out weeks. They help pre-select our 72 pilot companies per year, so our team can focus our time where it does the most good: supporting and adding value to the existing portfolio.

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To start with, leaders can recommend only one company. Loyal gets to know you through the companies you recommend. Loyal will always assume you are only recommending your best. If you recommend a weak company (which Loyal will discover only after the pilot starts), then Loyal will judge you and your program accordingly, and will be unenthusiastic to fund more.

If you are a grad, ask your local leader. If you are a local leader, email kamal@loyal.vc or jeremy@loyal.vc listing the top 2-3 grads in your whole community, ranked in order, and Loyal will discuss possible timing and selection. Do not copy the grad, or introduce them. Loyal relies on you to filter and select, since you know your companies better than they ever could.

Attend one of Loyal’s local leader and entrepreneur information sessions, which occur 1-2 times per month. You can sign up here. In the interim feel free to review this presentation.

Yes. FI local leaders can become advisors with Loyal, and if that goes well, potentially also become venture partners working 1-2 days per week. Here is an outline of how Loyal works with advisors, which also touches on the venture partner role. If the advisor role (the first step) is of interest then please attend one of Loyal’s advisor information sessions.

Disclaimer

The foregoing and following is a summary discussion of certain frequently asked questions relating to Loyal’s investing. The terms of any investment will be detailed in the Data Agreement, a Mentoring Agreement, and, if appropriate, the Loyal Warrant (collectively ‘The Agreements). This summary is provided for general informational purposes only and may not be complete or applicable to all situations or companies. The information provided does not purport to address all matters relevant to Loyal or The Agreements in their entirety, nor does it purport to constitute a sufficient basis for companies to determine whether to enter into any agreement with Loyal.

Furthermore, this summary is qualified in its entirety by the terms of The Agreements, does not provide any representations or warranties related to such agreements, is not legally binding and is not a substitute for a review of the full terms of The Agreements. While this summary is offered in good faith and in the hope that it may be of use to companies, it is not guaranteed to be correct, up to date or suitable for any company’s purpose. Loyal accepts no liability in respect of this information or its use, and by using this summary you agree to hold Loyal and its affiliates free of any liability related to this summary.

Each company is solely and independently responsible for investigating the facts relevant to its circumstances, including all matters addressed in this summary, and for determining what other sources of information to consult. Each company is strongly urged to review The Agreements in detail, consult with their legal, financial, tax and other advisors, and ask any additional questions they may have of Loyal prior to signing any agreements. In the event of any conflict or discrepancy between this summary and The Agreements, the terms of The Agreements shall prevail.