How does Unity Decide which Deals to Invest in?

We will start this week with questions from our clients! Please comment below if you will like further information!

Question: 

How do you decide which deals to invest in? 

Response:

Simply, we only invest in deals that fit our credit box. Our deals typically come from five funnels:

1. credit funds,

2. credit platforms,

3. boutique investment banks,

4. deal brokers, and

5. our internal network of founders and entrepreneurs.

Our origination engine acts as a funnel for best-idea private credit deals, because most deals that come to us are already pre-selected. Last year, we saw ~230 deals and invested in 10. 

We are highly selective because we only invest in 4-5% of the deals we see. As a result, we can invest in the absolute best risk-reward deals. We do not have a mandate to deploy a certain amount of capital. As for our underwriting standard, we have rigorous requirements – from overcollateralization to personal guarantee to holdback provisions – for protecting principal and minimizing risk. 

That said, we are also much more flexible than conventional banks. We are willing to work with our borrowers to develop creative solutions to both satisfy their borrowing needs and our lending requirements. 

Our eligibility criteria are listed below. 

Eligibility Criteria 

1. Interest rate greater than 15% annualized (could be a 6-month 8% loan)

2. Duration less than 24 months (prefer less than 12 months)

3. Periodic cash coupon payment (monthly or quarterly) 

4. Strong and honest/trustworthy borrower * Borrower needs to sign a personal guarantee (at a minimum sign a PG against fraud and misrepresentation)

5. Company and Key Man are in good standing 

The company needs to have collateral that meets the following criteria: 

• Clear and verifiable market value that can be objectively determined

• Must be easily and efficiently converted into cash in a reasonable timeframe. This means there must be a market with willing buyers, and the asset must be free of restrictions that would make it difficult to sell.

Financials

• The runway must be greater than 12 months based on the historical burn rate

• The company must show either profitability or a strong balance sheet

• Be able to demonstrate a clear path toward repayment. 

CONNECT WITH US IN LINKED IN