Taking the risk out of restaurant financing
inKind Credit Fund, LP presentation
Q1 2021
THIS WEBPAGE IS BEING FURNISHED BY OR ON BEHALF OF INKIND CREDIT FUND LP ("INKIND") ON A CONFIDENTIAL BASIS TO THE RECIPIENT SOLELY FOR THE LIMITED PURPOSE OF PROVIDING CERTAIN GENERAL INFORMATION ABOUT INKIND'S BUSINESS AND OPERATIONAL CAPABILITIES.

THE INFORMATION CONTAINED IN THIS WEBPAGE IS NOT, AND MAY NOT BE RELIED ON IN ANY MANNER, AS LEGAL, TAX, INVESTMENT, ACCOUNTING OR OTHER ADVICE OR AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY AN INTEREST IN ANY PRIVATE FUND OR ACCOUNT THAT MAY BE OFFERED BY INKIND OR ANY OF ITS AFFILIATES (EACH, A "FUND").

BY ITS ACCEPTANCE HEREOF, EACH RECIPIENT OF THIS WEBPAGE ACKNOWLEDGES AND AGREES THAT THIS WEBPAGE MAY NOT BE REPRODUCED OR PROVIDED TO OTHERS, IN WHOLE OR IN PART, NOR MAY ITS CONTENTS BE DISCLOSED WITHOUT THE PRIOR WRITTEN CONSENT OF INKIND, AND THAT THE RECIPIENT WILL KEEP CONFIDENTIAL ALL INFORMATION CONTAINED HEREIN NOT ALREADY IN THE PUBLIC DOMAIN.

THE PROJECTED RETURNS OR OTHER INFORMATION SET FORTH IN THIS WEBPAGE (THE "PROJECTIONS") ARE HYPOTHETICAL, HAVE BEEN PREPARED AND ARE SET OUT FOR ILLUSTRATIVE PURPOSES ONLY, AND DO NOT CONSTITUTE FORECASTS OR GUARANTEES OF FUTURE EVENTS. THEY HAVE BEEN PREPARED BASED ON INKIND'S CURRENT VIEW IN RELATION TO FUTURE EVENTS AND FINANCIAL PERFORMANCE OF EXISTING INVESTMENTS MADE BY INKIND AND VARIOUS ESTIMATIONS AND ASSUMPTIONS MADE BY INKIND.

THE ADOPTION OF THE TARGET RETURNS PRESENTED HEREIN IS NOT INTENDED TO PREDICT THE PERFORMANCE OF THE INKIND CREDIT FUND ("IK CREDIT FUND"). INSTEAD, THE TARGET RETURNS ARE INTENDED TO PROVIDE ADDITIONAL CONTEXT WITH RESPECT TO IK CREDIT FUND'S INVESTMENT STRATEGY. THE ULTIMATE RETURNS REALIZED BY IK CREDIT FUND WILL DEPEND ON NUMEROUS FACTORS AND ARE SUBJECT TO A VARIETY OF RISKS. THERE CAN BE NO ASSURANCE THAT IK CREDIT FUND WILL ACHIEVE ITS OBJECTIVES OR THAT IK CREDIT FUND WILL BE ABLE TO IMPLEMENT ITS INVESTMENT STRATEGY. AS WITH ALL INVESTMENTS, PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RETURNS OF IK CREDIT FUND.

CERTAIN INFORMATION ON THIS WEBPAGE CONSTITUTES "FORWARD-LOOKING" STATEMENTS WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL," "SHOULD," "EXPECT," "ANTICIPATE," "ESTIMATE," "INTEND," "PROJECT," "TARGET," "CONTINUE" OR "BELIEVE" OR THE NEGATIVES THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. FURTHERMORE, ANY PROJECTION OR OTHER ESTIMATES IN THIS PRESENTATION INCLUDING ESTIMATES OF RETURNS OR PERFORMANCE, ARE "FORWARD LOOKING STATEMENTS" AND ARE BASED UPON CERTAIN ASSUMPTIONS THAT MAY CHANGE. DUE TO VARIOUS RISKS AND UNCERTAINTIES, ACTUAL EVENTS OR RESULTS OR THE ACTUAL PERFORMANCE OF THE FUNDS DESCRIBED HEREIN MAY DIFFER MATERIALLY FROM THOSE REFLECTED OR CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. RECIPIENTS OF THIS WEBPAGE SHOULD PAY CLOSE ATTENTION TO THE ASSUMPTIONS UNDERLYING THE ANALYSES AND FORECASTS CONTAINED HEREIN.

FOR BUSINESS AND PROFESSIONAL INVESTORS ONLY. NOT FOR DISTRIBUTION TO THE GENERAL PUBLIC.
Typical Forms of Restaurant Financing
All failed during COVID
Equity Investments
Very high risk


Rely on profits and great operators to get paid back over many years
Loans
High risk


Rely on the restaurant choosing to make a monthly payment and staying open for many years
Merchant Cash Advances
High risk


Put immediate financial stress on restaurants, endangering future operations
inKind's Unique Approach Tells a Different Story
Over four years, our default rate has decreased from 1.8% to 0.1%
while maintaining average returns of 16%.
How inKind Finances Restaurants
First: inKind buys a bulk amount of Food and Beverage (F+B) credit in a restaurant. This is typically $100,000 in F+B Credit for $50,000 in cash, per location
Then: inKind sells the food and beverage credit to consumers as House Accounts / gift cards through multiple channels.

inKind sells credit through a range of channels (online marketing, in-store collateral, reservation reminders).

We obtain the restaurant's mailing list and social accounts to target marketing to customer who know and love the business.

We have built automated systems and campaigns to (i) acquire users and (ii) ensure users top up with additional credit when low.
inKind Financing is a modern financing solution that is great for the restaurants, customers, and inKind
Restaurants
Low cost capital
No Equity
No Loan
Sophisticated marketing solution
Customers
Get bonus credit
Become even more loyal customers of the restaurant


inKind Investors
Quick recoup of capital

Low risk

Reliable returns
inKind is a WIN for restaurants
Our low cost of capital allows us to work with great restaurant groups



The restaurant industry has low marginal costs, so the cost of "servicing" F+B credit is low.

Take a glass of wine as an example: If a customer orders a glass of wine at a restaurant for $10, it usually costs the restaurant about $3 (i.e., the cost of the wine) to pour that glass.

If we fund a restaurant $50,000 in exchange for $100,000 in F+B credit, and that F+B credit was all used to buy glasses of wine, it would cost the restaurant $30,000.

$50,000 in capital upfront costs the restaurant $30,000 as they service the F+B credit.



inKind is a WIN for customers
We sell the credit by offering a discount

inKind incentivizes guests to purchase the credit by offering a discount.

We sell credit to people on the restaurant's mailing list, social media followers, and inKind users in the vicinity.

We can sell the credit more quickly by increasing the discount amount.

inKind is a WIN for our investors
Low risk with consistent returns
inKind is exposed only so long as it holds credit in the restaurant; the quicker that credit is sold, the quicker we exit the deal.
inKind's Unique Financing Model
Greatly Reduces the Risk
We only lose money if we cannot sell the F&B credit AND the restaurant closes
Perceived risk: 90% of restaurants close in 5 years.

Actual risk: We are in and out of a particular restaurant deal in 7 months, and can predict and help maintain them for this long.
As a result of our efficient marketing, inKind can recoup the principal invested in a deal far sooner than through traditional financing - in months, not years. That minimizes the risk of restaurant financing and increases the returns.
The graph above shows that our marketing to sell F&B credit continues to improve. For completed deals in 2020, it took less than 2 months on average to recoup 50% of capital and 6 months to recoup all capital. On Jan 28, 2021 we had our record sales day - selling $135,000 in a single day by offering a $50 additional credit bonus.
Risk Mitigation
3 strategies to predict short term viability of a restaurant and help maintain them for that period
1. We use underwriting to determine how much credit to purchase
Financials
Is the restaurant currently sustaining itself?
Social Validation
Is there a market for the F&B credit?
Offer Determination
How much credit
can we sell?
2. We help keep inKind-funded restaurants open
We provide cashflow management assistance

For independent restaurants we take daily rent payments to send on to landlord and sales tax payments to submit to the state


Online marketing for restaurant to increase revenue

We provide email, web, and social media marketing support to keep the restaurant "top of mind" for credit purchasing and general patronizing
3. We have multiple strategies to recover capital,
if needed
Sell credit quicker
If we want to exit a deal, we can increase the bonuses to sell credit quicker.
Secured Credit
We make UCC-1 (secured creditor) filings to secure our position in the debt stack.
Enforceable Contracts
We've had 100% success in winning arbitration awards to enforce our position.
How the fund is paid
inKind credit fund has an average return of 16% on its capital per year.

Due to record demand from stable operators looking to expand, inKind is guaranteeing a 15% annualized return for the next year for investors.

inKind credit fund investors get paid back and make a return on each funding before inKind makes any money. The faster inKind sells credit, the greater the returns because inKind is able to redeploy existing capital to fund new deals.
Experience
210+
Financings Issued
$11.5 Million
In Current Funding
16%
Average Annual Yield
Need for capital




inKind projects significant and continued growth in 2021 as the economy recovers from the COVID-19 pandemic.

inKind has already sourced 7 deals this year that will require $15.3 million funding in the first three quarters.
inKind Credit Fund Details
With other funding sources such as private investors and loans pulling back, COVID-19 has presented a once in a lifetime opportunity to fund restaurants.

The next 36 months will provide an excellent opportunity for the best restaurant operators to grow and for inKind to be their financing partner.


Raising $50MM into Credit Fund in 2021
Projected Fund Portfolio Composition
85% of inKind's portfolio is in restaurant groups with $10MM+ revenue
Independent
Annual Revenue of
up to $2MM
-
Financing Amount
< $50k
Small Group
Annual revenue of
$2MM - $10MM
-
Financing Amount
$50k - $200k

Medium Group
Annual revenue of
$10MM - $25MM
-
Financing Amount
$200k - $1MM

Large Group
Annual revenue of
$25MM+
-
Financing Amount
$1MM+
Pipeline
inKind has a pipeline of experienced restaurant operators who are stable in the current climate and see tremendous opportunities ahead.
The Fund's Team
Our fund team has experience in investing, legal, and portfolio management
Johann Moonesinghe
Fund Manager
Expert in restaurant finance and operations. Over thirty personal hospitality investments. Established restaurant operator. B.S. in Computer Science, UCLA
Andrew Harris
Fund Manager & Risk Analyst
Graduate of the London School of Economics and former corporate lawyer with Linklaters LLP. Andrew has also owned and operated restaurants for the last five years.
Derek Keller
Finance Director
Former investment banker and venture capitalist, most recently with Techstars Ventures and Highway 12 Ventures. Served as CFO at both Pilotworks and Lendio.
Fund Key Terms
Returns
  • Minimum 15% return guaranteed for first 12 months.
  • Even throughout COVID19, returns have historically been 16%.
Liquidity
  • 60 day notice.
  • 12 month lock-up.
  • Optional Quarterly redemptions.
Integrity
  • GP has invested $1.5MM in the fund.
  • Third party fund administrator.
  • Annual audit.
Fees
  • 1% management fee.
Q. How long has inKind been financing restaurants?
A. inKind has been financing restaurants since Q4 2016. While the inKind Credit Fund is a new structure, the existing debt model has been used since used Q2 2018, and inKind has made every quarterly payment due and has not lost any investor's principal investment capital.
Q. What is the minimum investment?
A. The minimum investment in inKind Credit Fund is $250,000.
Q. How much is inKind Credit Fund LP raising?
A. inKind is looking to secure $50MM for the inKind Credit Fund.
Q: How often will I be updated about my investment?
A: On a quarterly basis, investors receive capital account statements and investor newsletters. At any time, an investor may log in to the investor portal issued by our fund administrator, Goodform, to see all statements and documents related to their investment. We also always welcome calls and emails from our investors.
Q. Do I need to be an accredited investor to invest in the fund?
A. Yes, our funds currently only allow accredited investors.