Investing at Inflection Points
Why the RRA is designed for upside
Last week, we shared what makes the RRA unique, and ultimately attributed that to the distinctive nature of brick-and-mortars. This week, we unpack that.
People often talk about hockey stick growth, and investing at the start of that trajectory to see meaningful payoff. With the clear risk being: what if it never takes off? Day 0 investing is a different game.
At Bonside, we talk about step functions, and investing at an inflection point – which doesn’t require the full risk of investing at day 0 in order to see a payoff.
Illustrative. The slope is the ramp up of new location, the flat line is steady state.
Brick-and-mortars uniquely follow a step function as their growth curve due to capacity constraints. To unlock new revenue, you have to unlock more capacity, which means opening new doors.
With our RRAs tailor-made to brick-and-mortar, we invest at inflection points: when businesses are stable and ready to unlock the next “step” in their capacity. The more “steps” unlocked, the higher the monthly payouts, the faster businesses and investors complete their paybacks.