Perpetual Financing Strategy

After it was founded in 2008, AirBnb developed a “Perpetual Financing” strategy to finance its rapid growth. Under the strategy, which is ideal for startup and early stage companies,that have highly scalable technology and products, a startup provides an influencer with the with the opportunity to invest in its seed round. The influencer has the incentive to introduce the company to their wealthy contacts who invest in the company’s subsequent rounds which are at higher valuations or prices.

The strategy minimizes dilution and eliminates the need for a company, during its early stages, to have to negotiate with venture funds and professional investors to obtain the capital. UBER, which was founded in 2009, adopted the strategy. See “UBER was the First Startup with a ‘Wealth Sharing’ Financing Strategy” by Michael Markowski, Director of Research of SCW. Dynasty Wealth, which owns and operates SCW, utilized a variation of the strategy (accredited investors instead of influencers) to assist SCW listed EmotionTrac to finance all of its rounds to date. The strategy is highly disruptive to the venture capital industry. The table below depicts the statistics for UBER’s perpetual financings from 2010 to 2015.

While both UBER and Airbnb utilized the perpetual financing strategy to scale their revenue quickly, they were not the first to utilize the strategy. Michael Markowski utilized the strategy to finance the venture stage companies in which he underwrote IPOs for early (1984-1991) in his career. His career began when he joined Merrill Lynch in 1977.

The chart below depicts the share price increase for Senior Service Corporation, from its IPO, that Mr. Markowski underwrote, to its acquisition by United Healthcare. The tables inside the chart depicts Mr. Markowski’s perpetual financing strategy that was utilized by the company and its Balance Sheet. The strategy has proven to be ideal for derisking venture and early stage companies.

Data from tables above obtained from 12/17/1987 brokerage firm buy recommendation.

Perpetual Financing Strategy Videos

Perpetual Financing Strategy

Perpetual Financing Strategy Videos

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