Loon Creek Capital Group (www.looncreekcapital.com) specializes in streamlined group investing services for private investors. Formed in 2010 to address the needs of the local angel community in Boise Idaho, the company has grown to provide services to angel investors across the U.S. The Partners are active angel investors, and experts in the unique challenges of investing in early stage companies.

The LLC Manager is usually the individual who is leading the effort to invest in a company for the group. The group members designate authority to the LLC Manager to sign documents on behalf of the LLC and to make certain decisions. This role can be customized to meet the needs of your group. Loon Creek can serve as LLC Manager under a separate contract with your group.

A cash reserve is money collected during formation that is held in escrow to be used for future expenses. This avoids extra expense and hassle to your investors of a capital call in the future. If the money is not used, it is distributed back to the members of the LLC upon liquidation. Cash reserves are collected at the Manager's discretion. Our team will work with you to determine an appropriate amount to reserve.

The minimum amount to invest in a syndicate is set by the LLC Manager. Loon Creek recommends an investor minimum of $5,000.

SPV stands for Special Purpose Vehicle, and is commonly used to refer to an LLC that is formed to make a one-time investment in a specific company. Individual investors who wish to invest less than the company’s minimum or who wish to achieve a larger presence on the company’s cap table join the LLC and invest together as a group. SPVs are often referred to by other names including Syndicate, SPE, opt-in funds or sidecar funds.

Loon Creek Forms LLC; manages investor subscriptions Issues Capital Call; collects funds Closes the Investment Monitors investment and maintains LLC until liquidation Investor Executes online documents to join the LLC Sends funds via ACH or wire to complete capital call Receives confirmation of investment Relaxes until liquidation

Absolutely! If the investment you are making includes a revenue or royalty-based payment component, our process remains essentially the same as for an equity-only investment. The two main differences are: 1. our services during the Management phase will include receiving of payments and issuing of disbursements to the investors on a monthly, quarterly, or annual basis, and 2. tax returns and issuance of K-1s will be required annually.

Equity investments: The simple answer is “usually not”. The more complicated answer is as follows: K-1s are issued when the SPV files an income tax return. Income tax returns are filed only when there are taxable transactions to report to the IRS. Under our standard model, there are normally no taxable transactions until exit and therefore no tax returns are filed and no K-1s are issued until the exit event. Convertible notes: If the SPV invests in a convertible instrument which accrues interest, at conversion the SPV will usually file a tax return covering the interest accrual and will issue K-1s. Once converted to equity, then usually no additional tax returns will be filed until the exit event (see “Equity Investments” above) Recurring revenue investments: Yes. Once the SPV has started to receive payments and distribute them to investors, the LLC will be required to file a federal tax return and issue K-1s annually.

Yes. In most cases it will be simpler and less expensive to set up individual LLCs but when it makes sense to use a Series LLC, we are happy to service it.

Usually. Because every LLC is unique, we need to understand our service obligations under the existing LLC. We’re delighted to discuss this with you.

This is a common problem. One way is to consolidate the small investors into an SPV so that collectively they represent one entry on the cap table. We can manage this process for you.

The Manager leads the effort to invest in the "company" on behalf of the group. The group members designate authority to the Manager to sign documents on behalf of the LLC and to make certain decisions as outlined in the LLC Operating Agreement. Loon Creek Capital https://www.looncreekcapital.com/ is the professional Administrator of the SPV. They will form the LLC, enroll the SPV members, aggregate funds, coordinate funding and closing of the investment in the "company" and oversee the SPV until it is liquidated.

There are several possible fees involved with set up and administration of each SPV. These vary, but in general, the costs include: The direct expenses of forming and maintaining the SPV. Loon Creek charges per investor for formation services. This is a one-time upfront cost, we do not charge annual maintenance or administration fees throughout the life of the SPV. Should there be tax returns required (we anticipate only one return in the life of the SPV - two when investing in convertible notes) there will be a fee for preparation of that return, and your share of that expense will be invoiced at the time. Other expenses that may be incurred include attorney fees and federal Form D and state ‘blue sky’ filing fees. Each investor’s share of any such fees will either be deducted from your capital commitment or invoiced separately, at the Manager's discretion Management fees. The Manager often charges a fee on top of your capital commitment as compensation for their work to source, vet and manage the deal and the investors. This fee may be deducted from your capital commitment or invoiced separately, at the Manager's discretion. Carried interest and wind-down fees. The Manager typically earns a percentage of carried interest and Loon Creek earns a percentage carried interest. Carried interest can be thought of as the net profit on ths SPV, which means that if and when there is an exit that generates a return in excess of your initial capital contribution to the LLC, net of costs, you will pay a percentage of the profits of the investmentas carried interest. In the event of a bankruptcy, Loon Creek charges a wind-down fee to coordinate a tax return to claim your loss and all services needed to liquidate the SPV. For more information on specific fees, please contact us.

There are two sets of legal documents you will need to review when you invest through our SPV: COMPANY Documents: These are the legal agreements related to the equity or debt raise by the company in which the SPV is investing. These describe the terms of the raise and investor rights relative to the security that the SPV is purchasing. It is important to know that while the SPV as a group will have the rights described, you will not hold the Company’s securities directly. You will own your interest indirectly as a member of the SPV, whose sole asset is the Company securities. SPV Documents: These are the legal agreements related to the formation of the SPV. You will be asked to review and execute an Operating Agreement for the LLC, a Subscription Agreement, and a W9 or W8 to establish your tax status. The Subscription Agreement is a standard form used for you to tell us you want to participate in the SPV, and for us to confirm that you are legally eligible, as an accredited investor, to make a high risk private investment. This document contains a lot of disclosure intended to make sure you understand the risks of making an investment of this type, through this type of structure, in an illiquid security issued by a start-up company. Like the other documents, we strongly urge you to review it with your counsel before you decide to make an investment.

Once you have indicated interest in making the investment, Loon Creek will contact you with 3 tasks to complete: Complete an online form with basic information about yourself and how you are making your investment (i.e. as an individual, through an entity such as a trust or IRA, etc.). Sign a digital signature packet that includes the Subscription Agreement and the Operating Agreement. Send in your capital call prior to the funding deadline. Once all the investors in the SPV have completed those tasks, the Manager will sign the company’s documents and will transmit funds to close the investment. You will receive a notice that the investment is complete.

The Manager is responsible for any votes or decisions that will need to be made regarding the SPV's interests in the company. Typically the Manager will pass any important decisions through to members about how to vote the shares. If you do not respond to such requests, the vote will side with the majority of members who do respond. If there is no response, the Manager votes at their own discretion. The right to transfer your ownership in the SPV (and therefore your indirect ownership in the company) is restricted, as is typical with most investments in venture funds and start-ups. There are some exceptions for transfers to an affiliate or family member. See the Operating Agreement for full details.

You will be issued a K-1 by Loon Creek, pro-rata to your interest in the SPV, when there is a liquidity event, a distribution or other taxable activity. Annual tax returns and K-1s are not expected and Loon Creek will notify you each year if you will receive a K-1 or not. Under the Operating Agreement, the SPV will be perpetual until our interest in COMPANY is sold or liquidated. Our service contract with Loon Creek provides management until the SPV is dissolved, however long that takes. Disclosures It is important to note that neither the Manager nor the Administrator is acting in the capacity of an “Investment Advisor”, which is why we give you the opportunity to do your own due diligence and thoroughly review these documents and the deal documents with your legal and financial advisors before you decide to invest, and why we require you to confirm to us that you have reached your own judgment about this investment decision and are not relying on us as Investment Advisor.