Keys to getting support for In3’s CAP project funding

Assuming you want to pursue our Family Office’s funding via In3’s Completion Assurance Program (CAP) — compare to other bespoke funding options at in3capital.net/alternative-in3-mid-market-project-funding — CAP’s complete steps are in3capital.net/steps-to-project-fundraising-success-using-cap

Security can be in the form of a highly leverage cash deposit, returned once all funds are transferred (before the project begins commercial operations), or as a bank-involved guarantee, usually a Standby Letter of Credit (SBLC).  Neither form is needed until the last step before financial closing, once the funding Investment Agreement is negotiated, signed and notarized.

Here’s a guide to deciding which guarantee to use: in3capital.net/deciding-which-financial-guarantee-promises-the-most-advantages

In most cases, this Security can come either from the developer’s own holdings or an involved “sponsor” such as a vendor (well-established EPC firm, general contractor or OEM), co-development partner or third-party guarantor that takes a modest equity interest in the project. 

Additional options new for 2025 to help bring funding within reach:

1. Cash deposit instead of Standby Letter of Credit — Leverage ~3x cash deposit as Completion Assurance security or check out these practical tips.
2. Lower minimums — In3CAP’s minimum investment is normally $25 million, but we temporarily can offer as little as $15 million in total funding per project or portfolio with a minimum 35% cash deposit ($5.25 million). We still prefer projects above ~$75 million.
3. Leverage Senior Debt after Security Minority Equity: Secure partial CAP funding as equity with available security then let In3 arrange the rest as senior debt. Other techniques include funding and building in multiple tranches, using a bridge loan or hybrids of these. In3 management services can help you sort this out.
4. Land lease-back model provides CAP security: If working in US or Canadian populous markets (top 30-50 cities) use a Ground Lease structure for the necessary security and 100% funding.

See also: In3 client case studies and testimonials

If you’re ready to move forward with the first few essentials (using this guide), ask for either (a) In3’s EPC/GC/OEM briefing or (b) CAP guarantor sponsor briefing that can be tailored to your own situation. They both provide a clear explanation of why we structure financings this way.

Step-by-step guide to bringing a sponsor on board, potentially using our presentation materials, tailored to your needs, as a way of introducing yourself and making the request of the right EPC, OEM or Construction Firm.  Click here

Qualifying project developers can ask to use In3’s CAP funding presentation materials to help explain this program to prospective backers, in order to gain their mindshare and find the right one.

 

The “right” backer is up to you, typically any party that you can get interested in working on, supplying equipment to, or other benefits derived from your project(s). That requires project developers to show they’re ready to interview and select/contract with the leading firm. The selected firm would, in exchange, offer evidence of their willingness to temporarily pledge the asset(s) for either a financial instrument) that helps to secure all the required funding and to incentivize and focus the parties on completion of the project assets.  This Completion Assurance is different than insurance bonding, as it requires a bank-involved instrument like an SBLC or cash deposit for at least 30% of the project’s budget, but for SBLC’s preferably closer to 75% (in aggregate), of the project’s total budget.

Consider involving an unaffiliate third party guarantor by hiring In3 to assist with making those arrangements. This premium service is arranged on a bespoke basis with select projects under a Management Services Agreement (MSA). more

Tips on arranging sponsorship:

• • If the total funding requested is above ~$50M, CAP funding guarantees can also be brought to us in 2-3 stages or tranches, decreasing costs for getting funding started.

• • You may need to bargain with prospective backers to see what it would take to get them on board with this guarantee, at least in theory, assuming everything else checks out and is to their satisfaction.

• • To gain bargaining power, you may want to line up more than one potential backer, and negotiate based on clear scope-of-work (role and responsibilities) per their initial cost estimates. In practice, clients have found that by paying them an enhanced fee for their services (all payments to such vendors are assured, from our funding partner, based on draw schedule that gets pre-approved and locked down by our funding bank) they are more likely to offer a larger guarantee. Sometimes a modest equity interest in the operating project helps demonstrate your commitment to gain-sharing.

Offering a carried interest is up to you, of course, but history shows you actually give up less equity overall if you can get the guarantor on board for a larger proportion of the budget. 

For example, you might offer them a modest share (5-10%?) of the cashflows for twice as large a guarantee, increasing it from, say 35% of the project’s total budget to 70%.  That increase would keep net ~35-40% more equity in the owner’s hands, making the offer of sharing a modest equity stake with the EPC/GC firm a substantial gain in preserving your own rights to cashflows.  Such improvements are worth considering as part of preliminary “what will it take” (to get them on board and committed) discussions.

Keep in touch with In3 as results unfold because as we may be able offer coaching or other assistance.

Thanks for your interest and diligent efforts with In3’s CAP funding program. Here’s to successful financial closing, construction and project launch!