The same project can be a great or poor investment depending on how it's structured. Learn the difference between preferred equity, notes, fund units, and revenue participation.
Structure determines who gets paid, when, and in what order
Two members can invest in the same building and have completely different experiences depending on the structure of their interest. Structure answers three questions: What do I own? When do I get paid? And where do I stand in line if things go wrong?
The 'line' is called the capital stack. At the bottom sits senior debt — the bank loan — which gets paid first and takes the least risk. Above it may sit preferred equity, then common equity at the top, which gets paid last but keeps the largest share of the upside. Every offering page on this platform shows the capital stack so you can see exactly where members sit.
The structures you'll see most often
Preferred equity gives members a stated 'preferred return' — say 8% annually — that must be paid before the sponsor takes any profit share. Above the preferred, remaining profits split by a stated ratio like 70/30 in members' favor. It balances income, upside, and protection, which is why it is the most common structure on this platform.
Debt or notes make you a lender, not an owner. You receive a fixed yield — often paid monthly — and your principal back at maturity. There's no upside beyond the stated rate, but you sit lower in the risk stack, especially when loans are secured by first liens on real collateral.
Revenue share entitles you to a percentage of a business's gross revenue — commonly until you've received a defined multiple like 1.6x your investment. Because it pays from the top line rather than profit, distributions can begin as soon as the business opens, and the outcome is defined without needing a sale.
Fund units pool your capital with other members across multiple assets chosen by a manager. You trade deal-by-deal control for diversification and the manager's pipeline. Fees (management fee plus carried interest) are the price of that service — always read the fee section of fund documents.
Reading structure like an investor
When you open an offering's Terms tab, look for four things. The preferred return: how much must members receive before the sponsor profits? The split: what happens above the preferred? The sponsor's co-investment: does the sponsor have meaningful money at risk alongside you? And the distribution frequency: does the cash timing match your goals?
There is no universally 'best' structure — a conservative income investor might prefer secured notes, while a growth-oriented member accepts equity risk for a larger outcome. What matters is that the structure matches the deal's risk and your own objectives.
Educational content only. This material is general in nature. It is not individualized investment, legal, or tax advice, and it does not consider your personal circumstances. Private investments involve substantial risk, including possible loss of the entire amount invested.
