There are currently new trending ways for injecting Capital, namely Royalty Based Investments; some refer to this as 'quasi-equity', some as 'mezzanine finance', and some as 'royalty-based' investment. Tom Gibson, former founding president and chairman of the Small Enterprise Assistance Funds (SEAF) and who has been promoting and providing risk capital finance for small and medium enterprises in emerging markets and the U.S. for more than 25 years, has developed a much less risky way to invest in early stage firms than strict equity alone, easing the exits procedures while keeping upsides, and aligning the interest of the investor and entrepreneur. Tom was contracted by IM Capital to present his model to more than 30 senior selected invited key persons in the funding eco-system in Lebanon as well as entrepreneurs, on June 24, at Berytech Beirut Digital District. The session started with a welcome note by IM Capital’s Investment Manager Mrs. Corine Kiame Kari, presenting IM Capital, the newly established support program in Lebanon that provides matching capital, equity guarantee, and technical assistance to businesses, funded by USAID through Berytech Foundation.

Tom then explained his specific investment methodology, combining:

• minority equity participation
• low-interest loan
• percentage of sales (“participation payments” or “royalties”)

and featuring the following:

• All investments have equity component.
• 75% - 90% of investment is in the form of a shareholder loan.
• All loans must include royalty rights in addition to interest.

The audience found the presentation very enlightening, and the presented model very interesting and applicable to a myriad of investments.