Simple Steps to CAP funding

The following streamlined steps assume your project(s) satisfy In3CAP’s four cornerstones — basically, that you seek $25 million or more in funding one or more projects in our focus areas, at any reasonable stage of readiness for funding, based in a country where we work (almost anywhere — In3CAP has global reach).

CAP funding offers 100% funding with minority equity carried interest at these indicative terms and conditions. See 1-page Tear Sheet (PDF).

START HERE: Take these steps in the sequence shown.

1. Start by quickly assessing if you have or can access non-cash assets or a strong balance sheet to obtain a CAP guarantee as security. How much asset value do you need? For non-cash assets, that’s up to the involved banker (or the strength of a balance sheet can be sufficient instead of specific assets), so for the most popular approach, a Standby Letter of Credit (tips for sourcing), assume ~50-75% of the total required funding to get the best terms. Make a note of your target, then present the value of available assets and this template to the banker that knows you best, then jump to Step 3.
   If not feasible with your own holdings, do you know someone who, if properly approached and incentivized, would be able to help bring this security?
   Note: Working in a country with a Sovereign Guarantee (more)? Jump to Step 3.
   
2. Consider using a cash surety deposit. This option leverages minimum ~25-35% of the total required funding and eliminates the need for a bank-involved guarantee. This is a deposit held in a separate, custodial account, returned upon delivery of the final drawdown of fund. More on this.
   
   If cash surety seems preferable, it is unquestionably the least complicated of all the available options.
   All we ask for is an Authorization to Verify (ATV) letter from the banker that can confirm the cash account’s or issuer’s capacity. Download this template then jump to Step 5.
   
   Either a partial bank-involved guarantee (typically 50-75% coverage SbLC) or the cash surety deposit option can qualify for 100% CAP funding’s flexible and advantageous terms.  What makes In3CAP funding different?
   
   CHECKPOINT: If neither assets nor cash, then talk with your In3 Affiliate or other advisor(s) about involving a sponsor or lender to show sufficient security for In3CAP funding. Or consider one of these Done For You (DFY) Solutions, products 4-6.
   Otherwise, CAP funding may not be right for you.
   
3. Contact a commercial bank to obtain a Standby Letter of Credit (SbLC) using the assets as collateral. Ideal SbLC face value is 50-75% of the total funding you require. More is fine; a bit less is possible so long as the face value does not dip below ~$18 million, our practical minimum.
   Start with a banker that knows you (private bankers tend to be most familiar with SbLCs used as security for project funding) or a sponsor’s banker.
   • Email the issuing banker In3’s SbLC verbiage template and apply for it to be issued, first as a “specimen” (sample), and later to be delivered via customary SWIFT.
   • Ask the banker to put the SbLC into their bank’s own format (such as on bank letterhead), but request they use the provided template to the maximum extent possible.
   • ACTION: Once received, send the bank’s specimen SbLC document to In3 or your registered Affiliate for approval. Once approved, go on the next step. NOTE: If the verbiage is not accepted, obtain the issuing banker’s version of what would be acceptable, and ask for an accompanying Ready Willing & Able (RWA) letter to formally request any changes.
     
4. Propose a monthly draw schedule based on the SbLC or cash surety deposit coverage. See draw schedule explanation here … the more leverage used, the longer it typically takes to draw down all the funds. To arrange for faster draws, increase either the SbLC coverage or size of the cash surety deposit. Make a proposal based on what you need and we will do our best to work something out.
   Next step: Proceed once either the SbLC or cash surety deposit plus (in either case) a monthly draw schedule has been pre-approved in writing.
   
5. Obtain a filled-out Authorization to Verify (ATV) letter from the cash or collateral account holder, where this person or company is known to the involved banker. The account is usually at that same bank branch, but sometimes banks are willing to use their ledger to confirm an account at a different branch.
   Note: the bank does not need to issue or sign this ATV letter. Just the account holder would, who is simply giving us permission to verify the account’s status, as well as confirm the capacity as sufficient for the type of selected Security. This is our standard process and allows the bank of the counterparty to communicate with us.
   
6. CHECKPOINT: Once we receive a verification reply (via Email) from the involved banker, provide all documents and disclosures for our Due Diligence. If all goes well during Due diligence, the funder issues either a term sheet or enter directly into preparation of the investment agreement with respective legal counsel. Sign and notarize the investment agreement and notify the involved bank.
   ACTION: The issuing bank sends the SbLC (SWIFT MT-799 then MT-760 followed by hardcopy) or cash surety deposit via wire transfer or EFT. This constitutes financial closing.
   • Funds begin monthly transfers per Step 4’s draw schedule into the project’s SPV bank account (unless otherwise arranged).
   • Cash surety deposit is released on final draw or SbLC is allowed to expire following completion — marked by Commercial Operation Date (COD).
   • Project begins operations and generating cash flows.

Be sure to register your project(s) by or before Step 6.
Got questions? Contact your In3 Affiliate or In3 directly.