When a founder in the Equity Collective achieves a liquidity event by selling their business or by going public, the Founder Institute distributes the proceeds to the stakeholders through the following process:
- The founder notifies the Founder Institute that there is an impending liquidity event, and FI will provide some strategic advice on closing the deal for the best terms.
- FI will also work quickly to provide any necessary signatures and approvals.
- When the transaction is completed and a payment is sent to FI, FI then takes the total return and divides it up by the contractual allocation, which is stored in our systems and checked by our accountants.
- Individual distribution checks are then cut for all of the stakeholders and mailed along with a nice letter.
In the future, FI may switch to PayPal for convenience.