How We Invest

Our Approach

At Long Term Impact, we invest in two ways: 1) using revenue based financing (Core Investments) and 2) using SAFE notes (Traditional Investments)

Core Investments

We invest $150K. We then actively engage with founders to work toward financial sustainability by helping iterate their sales process, establish product-sales fit, and move toward a repeatable and scalable sales motion. We also coach founders on other aspects of their business as needed.

We believe our investment and support are best suited for startups with the following characteristics:

  • For-profit companies that have raised less than $500k in dilutive funding.

  • Modest burn rates that are aligned with sustainable growth

  • Centered on improving student instruction and creating a more equitable U.S. PreK-12 public school system

  • Founders that prioritize profitability, sustainability, and independence over hypergrowth.

  • Founders who have products in market and are actively engaged in learning from their customers

  • Companies with at least $250K in revenue

  • Under-represented founders, including people of color, women, and LGBTQIA+ identities

Traditional Investments

In addition to our Core Investments, we also make smaller investments ($25K-$50K) in pre-seed companies with which we feel strong alignment but may not fit all of the criteria for our Core Investments. These investments are made using SAFE notes and follow the terms of the round.

We believe these investments are best suited for startups with the following characteristics:

  • For-profit companies that have raised more than $500k in dilutive funding.

  • Centered on improving student instruction and creating a more equitable U.S. PreK-12 public school system

  • Founders that are strongly considering prioritizing profitability, sustainability, and independence over hypergrowth.

  • Founders that have who have products in market and are actively engaged in learning from their customers

  • Companies with at least $250K in revenue

  • Under-represented founders, including people of color, women, and LGBTQIA+ identities

 

Our Investment Terms

Four our Core Investments, we have adopted a revenue-based financing instrument that aims to provide entrepreneurs with maximum flexibility. As long as an entrepreneur we invest in continues to maintain a strong focus on impact and financial sustainability, we will fully support them to have as much flexibility as they want.

We invest in your company and initially we take between 5% and 10% of the company’s equity. After 2 years, you begin repaying the initial investment in quarterly installments based on a percentage of revenue. For each payment you make, we give you back some of your equity. By the time you pay back the initial investment, our equity stake in the company will have been reduced by 50%.   Depending on what you choose there may be options to further reduce our initial equity stake. At the end of the day, as long as you continue to prioritize impact, we will support you by providing flexibility in what path you choose:

  • Scenario 1: You decide to move on to the next thing and sell the company. This will be no different than other exits.

  • Scenario 2: You decide to embark on a path of hypergrowth, high capital raise - sure go ahead. Our investment will convert to equity with the same rights as your next major investor.

  • Scenario 3: You want or need to take your time to grow the business with little pressure and would like to minimize revenue payments. You have a 2-year period from the time of investment before you start making quarterly payments based on revenue. This continues until the original investment amount is paid back. In turn, you receive half of the equity back.

  • Scenario 4: You want to maximize control - you retain as high % of ownership in the company as possible with zero external influence. As long as we feel you haven’t lost sight of impact, we support you. You have complete freedom to do what you want. You pay a total of 3x your initial investment and get almost all of the equity back.

If scenarios 3 and 4 are the most attractive to you, then that’s where we are the best fit.

 

Term Sheet Summary

Investment Amount: $150,000

Conversion: If the company raises $1,000,000, LTI’s equity stake will automatically convert to preferred stock with the same rights as other major investors.

Repayment Schedule: 5% of the Company’s revenues, quarterly

Percentage Equity: 5% - 10%