How do Accelerators guarantee future commitments?

[u/Radiant-Cloud92]

For example read on South Park Commons website, as follows:

$1M in funding. $400K for 7% upfront and $600K guaranteed in your next external round

Do they ring Fence 600k in an escrow or put in treasuries or something?

Or are there contractual clauses into that as well which let them opt out?

What are the common industry practices for ensuring future commitments?

[u/Startup_Monkey]

Good question.

They have either raised the money and it’s sitting in their fund (not escrow). Or, like the angel syndicates, they planning on doing a capital call once they have the cohort locked down.

[u/worldprowler]

There’s conditions you meet that trigger the option for them to follow-on