1. DEFINITION

A Fundraising Incubator is a company financing corporate transactions such as a merger, an acquisition, a securities private placement or an initial public offering (IPO) against an equity participation and a put option on this equityparticipation to the issuer itself. The put option, issued by the same issuer as the equity participation, ensures the investor that, in case of success ofthe transaction, it can resell this participation to the issuerimmediately after. Today, transaction financing is the exclusive privilege of all investment banks who make huge profits therefrom.

2. Objection

One could wonder why not a simple loan? The main reason is that under most jurisdictions, loans are limited to a certain interest rate percentage, called the usuryrate, generally less or far less than 25%. In Switzerland, the federal law limits this usury rate at 15% and makes any interest rate set above that limit unlawful and thus, not payable!

投资者通常希望获得更高的投资回报，因为至少从市场认知的角度来看，任何交易融资投资都代表着相当大的风险。

3. Risk of a Transaction Financing Investment

与交易融资投资相关的风险与交易成功的可能性直接相关。

Therefore, as a rule of thumb, we can say that the transaction financing investment risk is directly linked to thequality of the agreements binding the parties to the transaction and to these parties’ willingness to execute the transaction properly.

4. Rules of Prudence

交易融资投资的基本审慎规则如下：

• Having a commitment from both parties to the transaction provides the safest conditions to the investment. However, this is rare and mostly impossible. Commonly, a transaction financing agreement is entered into between one party to the transaction and the representative of the investors.
• 将投资的时间减少到最少。 这个相当简单的规则有很多含义，从物流到法律条件。投资者代表应为金融家或商人，而非律师，应将资金汇入其控制的账户，并核实各方的同意和意愿。
• Have all the transaction (key) terms agreed upon before the financing takes place. The investor or his representative must ascertain that the parties are in full agreement on all (key) terms of the transaction. While the parties might not be able to bear the cost of all agreements drafting before the transaction financing takes place, they can surely produce a complete term sheet for each agreement needed for the transaction. Any party receiving the transaction financing can also take the commitment toward the investor that no other additional or new (key) term shall be required from the other party after the financing takes place, preventing thereby the classic last minute requirement that makes the transaction fail.