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Photo by Kari Shea on Unsplash

The Cost of Raising Earnest: A Review of Earnest Capital’s Shared Earnings Agreement (SEAL)

Matt Wensing
Dec 7, 2018 · 18 min read

SEAL 101

“The whole point of all of this structure is to re-align us with founders.” — Tyler Tringas, Earnest Capital


Seal Typing


Once the number of funding options in this space increases, the terms of the SEAL [in terms of cash] will need to become more favorable.

Cost of SEAL Capital, in Dollars

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An example of a dynamic (variable) interest rate.
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Effective Interest Rate for SEAL with 4x Return Cap (f(x)=1460/x Graph Credit: Google Search)

Are We There Yet?

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3-Year Revenue Forecast (MRR) for SMB SaaS Company Growing 10% MoM (Credit: SimSaaS)
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3-Year Net Income Forecast for SMB SaaS Company Growing 10% MoM (Credit: SimSaaS)

You take an introduction to the venture partners at Stripe who say they are willing to invest $1m at a $10m valuation.

Cost of SEAL Capital, in Equity

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Venture Valuation Forecast Using Growth Rate Multiple on ARR (Graph Credit: SimSaaS)

Many funds promise to be more than money to their portfolio companies; for investors that take a cut of profits, delivering on this promise will be mission-critical.

Cash & Carry


The high cost of SEAL-based capital in terms of dollars and equity likely won’t come as a shock.

SEALing your fate?



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Matt Wensing

Written by

Founder, Summit. Believer in sustainable software businesses.

The Startup

Medium's largest active publication, followed by +686K people. Follow to join our community.

Matt Wensing

Written by

Founder, Summit. Believer in sustainable software businesses.

The Startup

Medium's largest active publication, followed by +686K people. Follow to join our community.

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