Seeking Short Term Financing (and/or Advice)

I am collaborating with a friend who specializes in product development and technology. He and his team have designed and built a system with the goal of swiftly and profitably bringing in-house manufactured products from direct-to-consumer brands to platforms such as Amazon and Walmart. To validate his model, he established a manufacturing business in the arts & crafts market, successfully growing it to $1.3 million in revenues. His system addresses improvements in both manufacturing processes and, specifically, the optimization of performance within the Amazon sales algorithm.

Currently, he is seeking to sell this technology to a strategic supplier who recognizes the opportunity to quickly establish a competitive online presence on Amazon and Walmart within an industry traditionally tied to brick-and-mortar establishments. They are interested in progressing towards a Letter of Intent (LOI) with my friend's company. To showcase the potential, my friend aims to demonstrate how rapidly his company can take a specific amount of the supplier's raw material, convert it into a marketable product, and position it favorably on Amazon.

To proceed with this demonstration, he is seeking an initial investment of $80,000, with the possibility of accessing an additional $120,000 in appropriate disbursements. The proposed terms include a 24-month loan period, with no payments during the first 8 months, although interest would accrue at a rate of 12%. Starting in month 9, he plans to initiate interest and principal payments. The initial 8 month deferment period will allow the business to focus on the sale to the of the business to the supplier, while the loan structure assures that an investor will begin to receive a return on their investment if the acquisition deal is delayed.

In the event of a sale of the business to any entity during the loan period, the investor would receive a return of 1.5 times the original amount invested or a percentage of the sale price, whichever is greater, and the loan would be discharged. The percentage of the sale price would be calculated based on a $4,000,000 valuation and 1.5 times the original amount invested. For instance, if $80,000 is loaned, the return would be $120,###-###-#### times the original amount). If the business sells for less than $4,000,000, the investor would receive $120,000. If the business sells for $4,000,000 or more, the investor would receive 3% of the sale price, which would be an amount exceeding $120,000 ($120,000 / $4,000,000 = 3%).

Early in 2022 the silent investment partner in my friend's business unexpectedly passed away which has required him to look for others sources of capital to advance this deal to a close.

I've had the chance to be personally involved in the preparation and presentation of the sale opportunity to the supplier. The supplier has said that they are very interested and the immediate next step is that the senior management of the supplier will be arriving to tour the factory operations. The expectation is that within 2 to 3 months we could have a signed letter of intent to purchase. This is a great opportunity to get a strong return on investment by helping an established business with a proven track record get across the finish line and close on being acquired.

Please DM with any interest - or I would welcome open dialogue from the Searchfunder community on the best way to pursue this type of investment (perhaps there is a vehicle out there that fits this need more appropriately)...Cheers!