Fees can be covered by the investors in the syndicate, the investee company, or the syndicate lead.
Fees are always calculated and finalised at the close of the round. There are no advance fees. Generally, they are covered by the investors in the syndicate, pro-rata (proportionately) to the amount they invest.
The amount Odin charges, and the way Odin's fees are calculated and billed, depends on:
The vehicle and associated price (detailed here)
Whether the syndicate raises the exact amount initially specified by the Lead, or a different amount.
Who is paying the fees
If fees are being paid by the investee company or the syndicate lead, we simply invoice them directly at the end of the process. If they are being covered pro-rata by the investors in the Syndicate (the most common option), we add them on top of investments and collect them during the process. If the final investment amount changes, fees are calculated as below.
Pro-rata payment of fees by the Syndicate (on top of their investment)
Typically, the syndicate lead has an allocation that the founder has specified to them. Based on this number the total fee the syndicate will pay is estimated in advance of the deal launch.
During the investment process, each investor is asked to pay their estimated pro-rata fee on top of their investment:
However, if the final amount raised is different to the allocation specified by the syndicate lead at the beginning of the process, the fee per investor will be different:
If the total raised is less than specified, the fee per investor will be higher
If the total raised is more than specified, the fee per investor will be lower
Where (3.a) or (3.b) is the case, the investor's final investment net of fees is auto-calculated based on Odin's fee structure. In general, investors do not have the option to "top up" their investment or receive a partial refund later in the process. It is made clear to them at several points in the process that their final investment net of fees may vary slightly if the total raised deviates from the allocation originally specified by the Lead.
The total allocation you have for your syndicate is $100,000, and you are using the "standard" vehicle:
The total estimated fee at launch will be ($100,000 x 0.019) + $1,400 = $3,300
During the investment process, your investors will be asked to pay an additional fee of 3.3% on top of their investment.
So if John Smith invests $10,000, the total he will send will be $10,330
If Jane Doe invests $5,000, the total she will be asked to send will be $5,165
If at close, the total raised is only $51,650 ($50,000, plus the estimated 3.3% in fees):
The final investment will be back-calculated: ($51,650 - $1,400) / 1.019 = $49,313.05
The final fee will be $51,650 - $49,313.05 = $2,336.95, equivalent to 4.739% per investor, not 3.3% as originally estimated
The pro-rata fee per investor will be back-calculated to give final investments:
1.John Smith's final investment net of fees will be $10,330 / 1.04739 = $9,862.61 So slightly less than the $10,000 he originally intended.
2.Jane Doe's final investment net of fees will be $5,165 / 1.04739 = $4,931.31 So slightly less than the $5,000 she originally intended.