Case Studies

Overview

Glade was a finalist startup in the inaugural 2020 Greater Colorado Pitch Series hosted by GCVF. This pitch event led to multiple follow-up conversations with GCVF and, eventually, a seed investment.

Why Redeemable Equity?

Glade’s founder bootstrapped the business for the first few years by reinvesting all profits into inventory for the next ski season. Glade launched with ski goggles, which are high margin products, but needed growth capital to launch new products, diversify marketing channels, and scale inventory. Prior to GCVF’s redeemable equity investment, the company raised $150k in angel funding to expand its product offerings.

However, Glade needed more funding for marketing spend, inventory, and product R&D. The company generated solid revenue for the 2019-20 season and sustainable and improving margins, but did not have access to more affordable capital yet. GCVF offered flexible growth capital for Glade with its redeemable equity product. The founder needed $100K to $200K to scale, but also wanted to maintain control and ownership over his business. Redeemable equity was a better fit than traditional VC funding for the founder’s vision.

Post-investment, Glade has grown its team to three full-time employees and released a line of sunglasses, making it a year-round eyewear company. It produced 112% growth in YOY revenue for the 2021-22 season as of Q1 2022 and expects to expand its product offerings and headcount in marketing and operations next season.

Deal Performance

As of Q1 2022, Glade has made two quarterly revenue-based payments to GCVF since December 2021 and paid 27.2% of the 3x return cap. The investment has a 0.8x MOIC and 20.2% IRR from the first two payments, in line with VC return expectations, but does not need an IPO or M&A exit to generate liquidity for LPs. It is still too early in the investment lifecycle to meaningfully evaluate IRR performance. However, GCVF expects the deal to generate a 3x MOIC and 25%+ IRR over the next three to five years.

Term Sheet

• Company: Glade Optics LLC (converted to C-corp)
• Investor: Greater Colorado Venture Fund I
• Investment or Purchase Date: September 16, 2020
• Investment or Purchase Amount: $100K
• Initial Ownership: 8%
• Residual Ownership: 0.8%
• Redemption Amount: 5% of Gross Revenue (as defined by GAAP)
• Repayment Cap: 3x ($300K)
• Grace Period or Redemption Start Date: 14 months + 14 days after Purchase Date (December 1, 2021)
• Payment Schedule: Quarterly
• Conversion Trigger: $1M preferred equity round
• Board Seat: None