inKind Credit Fund, LP
Q3 2020
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.
inKind's credit investors earned 17% in 2018, 11% in 2019, and 7% in 2020 - even through COVID.
inKind's unique model has provided low cost capital to 450+ restaurants in the US and Australia with a record industry low default rate of 1.8% in 2019 and 0.5% in 2020 (even through COVID).

inKind's credit investors have never lost money on a portfolio basis.
Typical Pitfalls of Restaurant Finance
Equity
Investments
Rely on profits and great operators to get paid back which is rare. Even great operators couldn't make distributions during COVID.
Loans

Rely on the restaurant choosing to make a monthly payment and staying open for many years. It is very hard to collect on these loans during COVID.
Merchant Cash Advances
Put significant financial stress on restaurants that already can't pay their bills, creating high default rates. Losses were so large to these lenders that 99% have stopped during COVID.
inKind was started from within the industry it serves
In 2015, Andrew Harris and Johann Moonesinghe founded the first restaurant incubator to help chefs in Washington, DC.

Johann had invested in dozens of restaurants and wanted to increase his odds of success by providing amazing chefs with guidance on running the parts of their restaurant that they weren't so good at - labor costs, managing cashflow, digital marketing, etc.

For 5 years, they oversaw operations and financing at the 18,000 sq/ft restaurant incubator, becoming experts in all aspects of restaurants.

In 2016, Kevin Tien was a participant in the restaurant incubator. He asked Johann to invest $50,000 into his concept.

Equity was too risky and Johann didn't want to be a loan shark.
Plus, Johann knew that Kevin needed more than just money.

inKind's unique solution was born...
inKind's Unique Way of Financing Avoids All of the Traditional Pitfalls
inKind purchases food and beverage (F&B) credit at a discount from a restaurant and then resells that F&B credit to consumers.
inKind financing is different. Restaurants don't pay us back. This gives us outsized returns (average IRR is 25%), AND extremely low loss-rates because we don't hurt the restaurants
inKind's financing relies on consumers buying F&B credit, not payments from the restaurant.
An Example of inKind Financing
Step 1: inKind pays $50,000 for $100,000 in F&B credit.
Step 2: inKind sells the purchased F&B credit to consumers as "House Accounts"
Restaurants love it because they get $50k in cash and it only ever costs them $30k in food
Restaurants love it so much, they keep coming back
Clients like The Ravenous Pig continually return to inKind's financing solution to expand and grow their operations.
The proof is in the pudding
inKind has financed over 450 restaurants in 193 deals since 2017
Client Funding Case Studies
the credit fund generated 17% IRR in 2018, 11% IRR in 2019, and 7% in 2020 (even with covid)
inKind Credit Fund receives the first 107% of sales
inKind finances deals using the debt fund's cash. The annual return for the debt fund is based on how quickly inKind can recoup and re-deploy capital.

As inKind sells food and beverage credit, the proceeds are returned to the debt fund and are available to deploy to another restaurant.

If $1m is deployed:
- Recouped once in a year: 7% return
- Recouped twice in a year: 14.4% return
- Recouped 3 times in a year: 22% return

A look back at our deals:
462
Restaurant Partners
$12 Million
In Funding Provided
25%
IRR to Credit Fund per Deal
Our secret to why inkind's loss rate was 1.8% in 2019 and 0.5% in 2020
inKind only looses money if it hasn't sold its F&B credit and the restaurant stops operating.
inKind's Investment Process
Financials
Will the restaurant go out of business?
Social Validation
Is there a market for the F&B credit?
Offer Determination
How much credit
can we sell?
Underwriting
Industry Low Loss-rates
1. Process driven underwriting

2. Risk Mitigation Strategies
De-Risking Investments
Sell Back Credit
We have the ability to sell un-sold credit back to the restaurant via an ACH authorization.
Guarantee and Security Interest
We require a personal guarantee on deals above $25,000 and take a secured creditor position.
Cashflow Management
For independent restaurants, we collect and pay their rent, avoiding the number one reason that restaurants close (getting behind on rent).
inKind has built a scalable platform for selling restaurant credit, fast.
inKind's automated and templated marketing allows us to sell credit efficiently. Restaurants don't have the time, resources or technology background to do this alone.
Email Marketing
Scalable, beautiful templates for all venue types, supported by analytics to increase open and conversion rates.
In-Store Collateral
inKind will design and print collateral that matches a restaurant's branding for in-store and to-go order distribution.
Social Media
Content generated to educate and convert consumers to visit the restaurant and purchase a House Account.
Embedded Tech Solutions
Tools like our inKind Email Capture can be placed on client websites to capture an industry high 10% of site visitor's email addresses.
Demonstrated to work across a braod section of hospitality businesses.
A portfolio that encompasses the right mix of hospitality.
Fund Portfolio Composition
inKind targets a diverse portfolio which balances returns and potential risk
Category I: Independent
Annual Revenue of
up to $2M

Typically 1 location with owner-operator
-
< $50k
Financing Amount

10%
Target Portfolio Composition

25%

Historic IRR

6%
Historic Losses


Category II:
Small Group
Annual revenue of
$2M - $10M

Typically 2 - 5 locations with back office support
-
$50k - $200k
Financing Amount

15%
Target Portfolio Composition

27%

Historic IRR

3%
Historic Losses

Category III: Medium Group
Annual revenue of
$10M - $25M

Typically 6 - 15 locations
with head office
-
$200k - $500k
Financing Amount

25%
Target Portfolio Composition

24%

Historic IRR

0%

Historic Losses
Category IV:
Large Group
Annual revenue of
$25M+

Typically 15+ locations with management firm
-
$500k+
Financing Amount

50%

Target Portfolio Composition

25%
Historic IRR

0%
Historic Losses
a fund that aligns investors and inkind perfectly.
Structured to provide uncapped maximums and quarterly liquidity
Fund Key Terms
Returns
  • Fund receives the first 107% of F&B credit sales from a deal.
  • A 7% annualized preferred return on outstanding capital in a deal.
Liquidity
  • Quarterly liquidity.
  • 12 month lock-up period on new money entering the fund (with a 4% fee charged should it be liquidated prior to this lock up).
Integrity
  • The fund will be administered by a third party fund administrator.
  • The fund will be subject to an annual audit.
Fees and Distribution
  • 2% management fee.
  • Opt-in to automatic quarterly redemptions of up to 3 % of the value of their capital account.
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 have 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 $50m for the 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.


The inKind Team

United by a passion for food and hospitality, matched by the knowledge and know-how to change the hospitality landscape.
COVID-19 has presented a once in a lifetime opportunity to fund restaurants. inKind can be the sole liquidity provider.
inKind's unique approach to restaurant financing allows us to continue to safely finance, when other providers have pulled back.

This gives inKind its pick of the best restaurants to finance.

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