Principal Protection

ECHELON PRINCIPAL PROTECTION PROGRAM FOR STARTUPS

This exclusive strategy enables startups to instantly create a valuable asset for their venture and to completely mitigate risk for seed funds from private investors.

Typical Scenario: An entrepreneur has an idea for a new gadget or software app and begins the process of prospecting for seed capital only to find that would-be investors are offering far overreaching terms that in the end only serve to hinder the company’s growth because the priority is on returning the capital with profit more so than growing the company.

Many times, the investor will insist on management oversight or board membership, greatly influencing the leadership towards premature exit and away from true innovation and growth. While well intentioned to protect the investor, this never bodes well for the venture and ends up hindering all parties.

ECHELON SERVICES brings a proprietary strategy into the mix via a unique Indexed Universal Life Insurance product where best suited (up to $1M project funding) or brings a comprehensive Life Settlement portfolio strategy for larger scale ventures.

The Indexed Universal Life “Key Man” strategy would roughly take form as follows in this illustration:

(* Performance in the below illustration is exclusive to our proprietary structured policy )
Policy on “Key Man” Entrepreneur – 45 yrs old, non tobacco user
Project Funding Seed Capital: $100K
Policy Premium front load: $200K

Year Age Premium Outlay Cash Draw Benefit Value
1 45 $200,000 $100,000 $575,000
2 46 0 0 $571,000
3 47 0 0 $567,000
4 48 0 0 $563,000
5 49 0 $26,000 $531,000
6 50 0 $26,000 $499,000
7 51 0 $26,000 $467,000
8 52 0 $26,000 $435,000
9 53 0 $26,000 $403,000
10 54 0 $26,000 $371,000

In the above illustration, $200k is deposited into the program and $100k of liquidity is made available immediately to begin the seed funding. The venture would use these funds to engage in operations. When properly managed, NO ADDITIONAL PREMIUMS are ever needed to sustain the program, the policy is non-MEC and all funds from this vehicle are perpetually tax-free (not deferred, but actually non-taxable)

Upon the 5th year, annual cash draws begin at $26,000 (approximately 26% annual ROI on funds in the program) and can CONTINUE FOR THE REMAINDER OF THE KEYMAN’S LIFETIME by following the program guidelines.

Investors will gain initial capital returns at year 8 (or sooner depending on the structure) and the program can generate an ongoing 26% annual dividend from there on. This performance is independent of the venture’s performance, thus providing reasonable principal protection assurance AND providing an excellent and sustainable performing asset. (Note – Younger “Key-Man” policies have even greater benefits)

 

LARGER PROJECT FUNDING:  $500k – $5M
Our program can be scaled to higher capacity by combining securitized life settlement portfolios in combination with our policy structure above and offers 100% principal return in approximately 8 years on average. A key distinction is that our structure does NOT require life policies to mature in order to facilitate the returns, hence removing the variable of when the policy will mature. In the case of a $1M project funding need, ECHELON SERVICES would coordinate approx. $2.5M transaction that would free up $1M in liquidity for the venture and provide a policy portfolio to the investor with a face value of $2.5M. The investor or any designated beneficiary as above would receive the $2.5M; essentially giving the investor “free” equity in the venture.

For more information and for detailed illustrations please contact us directly at
[email protected] or call 1-213-375-4753

Note: Echelon Services provides Consulting in the form of information and strategies utilizing proprietary products offered by exclusive third party registered financial entities. Echelon is not an insurance broker,  registered securities broker/dealer or with FINRA. All information is for illustration and concepts purposes and actual transactions would be conducted by registered brokers and agents in their respective areas.