The Herndon Blended Fund is a three-year, fixed term investment opportunity. The goal of the fund is to provide ample returns while being fully hedged against capital losses. There is also the opportunity for truly exceptional returns from venture investments while still staying under the fully protective hedge umbrella.
The fund will have two primary investment vehicles. The first is hard asset lending in the American Southwest. Loans up to 50% of free equity will be made, with a corresponding lien for 150% of value filed against the property, with any closing costs paid by the borrower. Interest of 12-24% per annum will be charged, with interest payments required on a monthly basis. Maximum loan term will be two years.
The second investment vehicle will be venture capital investments in the technology and biotechnology sectors. These are equity investments from seed stage through series rounds in companies that have a demonstrable technological advantage over their competitors or innovative, protectable intellectual property.
90% of collected funds will be invested in the hard money lending portion of the company, with the remaining 10% used for venture capital.
Investors in the Herndon Blended Fund will be paid out a yearly dividend of 5%-9%, contingent upon business conditions. An additional 3.33% will be credited annually to an investor's capital account. Additionally, the venture capital portion of the portfolio has a chance to provide exceptional gains above and beyond the projected yearly payouts.
The strength of the Herndon Blended Fund is how it's hedged against capital losses. This is done by only extending credit that is secured with hard assets, and by only lending up to 50% of existing equity in the property. Coupled with a lien against 150% of the property's value, this provides an exceptional buffer against default.
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