Investment Criteria and Conditions

In Gluon Syndicate we are looking for startups that meet these criteria:

🌍 CEE region (founders or business)

📊 pre-revenue or first-revenue

🏭 industry agnostic

💸 looking for a first investor on board (not a condition)

💰 seeking €50-300k investment

🚀 “Think Big” mindset

Convertible Loan Agreement (CLA) Summary

Parties Involved

The agreement is between the Investor (Gluon Syndicate), the Startup (Target Company), and the Founders. The Investor will provide funding through a convertible loan, with the option to convert the loan into equity under specific conditions.

Loan Amount & Purpose

The Startup sets two funding targets: an initial target and an additional second target. The second target serves as an investment cap, meaning it defines the maximum amount the startup is willing to raise and cannot exceed twice the initial target amount.

The investor’s obligation to provide convertible loan under CLA is conditional upon startup raising commitments equal to or greater than the initial target amount from the members of the angel syndicate.

If the startup fails to meet the initial target, the CLA becomes void, and no investment occurs.

If the total commitments exceed the initial target, the startup will receive an investment equal to the total amount of commitments raised, up to the second target.

Interest & Repayment

The loan carries a simple interest rate of 0.01% per year.

The loan will convert into equity upon a conversion event (explained below) and is not repaid in cash.

Conversion Events

The loan converts into equity under specific events, including:

• A significant investment from a third party.
• A change of control in the company.
• A non-significant investment from a third party (if investor approves so).
• The final maturity date of three years from the investment without any other conversion event. In the event of maturity, the conversion will happen at a valuation equal to half of the valuation cap.

Valuation Cap & Discount

The valuation cap for the conversion triggered by significant investment,  non-significant investment and change of control is calculated as 10x the amount of the loan provided by the investor under the CLA.

If the conversion triggered by significant investment,  non-significant investment and change of control occurs within one year of receiving the loan from Gluon Syndicate, the conversion discount will be 20%. If such conversion occurs after 12 months, the discount remains at 30% off the company’s valuation at the next qualified investment round.

Conditions for Loan Drawdown

Before the loan is disbursed, certain conditions must be met, including:

• The startup must raise commitments equal to or greater than the initial target.

Supervisory Board

A Supervisory Board of three members will oversee the company’s governance and key decisions (including reserved matters).

The Founders appoint one member, while the Investor (Gluon Syndicate) appoints two members, with one serving as the Chairperson (with no casting vote).

The Supervisory Board makes decisions by a two-thirds majority and oversees important matters including:

• Approving the annual budget and business plan.
• Supervising key financial transactions, including investments and loans over certain amounts.
• Hiring or dismissing key employees.
• Approving significant changes in company structure, such as mergers or new business ventures.

Warranties & Representations

The Founders and the company must ensure that all give warranties are true and not misleading. If any warranties are found to be false, the Investor can claim damages.

Investor Rights

The Investor has the right to approve or veto major decisions (reserved matters), such as changes to the company’s structure, financial commitments beyond budget, or raising new investments. The Supervisory Board also helps enforce these rights.

Confidentiality

Both parties must maintain the confidentiality of the terms and sensitive information related to the company.

Legal & Compliance

The agreement is governed by the laws of Slovakia. Any disputes will be resolved through negotiation or arbitration if necessary.