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turning around Non-Performing Startups

tactics for startups facing challenges and VCs burdened with non-performing portfolios

One common challenge in the startup ecosystem is the disparity between the time it takes for startups to reach milestones and the pressure from venture capitalists for returns. This misalignment often leads to premature decisions and missed opportunities for both parties.
YIXU steps in to bridge this gap by providing a unique solution tailored to address this very issue. YIXU operates as a specialized entity focused on acquiring with innovative monetization strategies and managing distressed or underperforming startup portfolios. This concept allows venture capitalists to transfer to YIXU risks associated with stagnant or depreciating assets.

YIXU offers monetization strategies

At the core of YIXU’s model is a commitment to shared success. YIXU works with founders and original investors to design earnout and profit-sharing structures that not only incentivizes collaboration but also fosters a culture of mutual benefit and long-term sustainability. YIXU extends vital resources to struggling startups with a collaborative model that stabilizes startups and aligns incentives, propelling mutual growth and value creation.

Example Financing process

YIXU and the VC enter into an agreement outlining the terms of the vendor financing arrangement. This agreement typically includes the duration and the profit-sharing mechanism upon monetization. YIXU could issue profit-sharing notes to the VC, which entitle the VC to a portion of the profits generated from the distressed assets acquired by YIXU. It's also possible to structure the vendor financing arrangement with a preferred return component. Under this structure, the VC would receive a predetermined return on their investment before other stakeholders, such as common equity holders, are entitled to distributions. This option provides a fixed return to the VC while still aligning their interests with the success of YIXU's operations.

The VC transfers underperforming startup to YIXU. This transfer may involve a variety of assets, including equity stakes in startups, convertible notes, or other forms of investment.

Upon acquisition of the distressed assets, YIXU provides extended team resources and advisors to the startups within its portfolio. This support aims to stabilize the startups, facilitate their growth, and enhance their potential for turnaround.

Throughout the duration of the agreement, YIXU maintains open communication and collaboration with the VC. Regular updates on the progress of the distressed asset, strategic decisions, and potential exit opportunities are shared to foster transparency and trust.

When a liquidity event occurs, such as an acquisition or other exit opportunities, YIXU and the VC realize the value generated from the turnaround of the distressed assets.
The profit-sharing agreement dictates the distribution of proceeds between YIXU and the VC, ensuring that both parties share in the financial rewards of the successful monetization.​

alleviating the burdens  without financial strain

YIXU heralds a new era in the realm of venture capital. Our pioneering approach not only offers transformative strategies to startups navigating challenges but also provides a robust solution for venture capitalists grappling with underperforming portfolios. With a steadfast commitment to alleviating the burdens of VC books without financial strain, we pave the way for profit-sharing on successful turnarounds.

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