Open Letter "Letter of Explanation: SPA Notes"

To our fellow builders, backers, and believers in entrepreneurial innovation— 

At Optimist Ventures, we don’t just invest in companies—we invest in founders. That means rethinking the tools, expectations, and timelines of early-stage finance to match the reality of building a business. It also means evolving the mechanisms we use to invest. 

You may have come across something new in our capital stack: a SPA Note. It looks a bit like a SAFE. But it also comes with something called a Shared Earnings Agreement. And you might be wondering: Is it equity? Is it debt? Is it some hybrid? 

Let us explain. 

The SPA Note: Not Equity. Not Debt. Something More. 

At its core, our SPA Note (Shared Profit Agreement Note) utilizes a standard SAFE (Simple Agreement for Future Equity) structure. This is the fallback. The SAFE remains in place as the legal vehicle to convert into equity only in the case of a liquidity event. 

Until then, it does not appear on the company’s cap table—but it should be disclosed during diligence and pro forma modeling. It carries no interest, enforces no covenants, and does not impact seniority. It’s an obligation, not ownership. 

But the real innovation is the Shared Earnings Agreement Side Letter. 

This side letter reimagines how and when capital is returned—not by pressuring founders with repayment schedules or fixed interest like traditional debt, and not by forcing premature dilution through equity conversion. Instead, it gives founders breathing room to grow, and investors a defined window for returns. 

Here’s how it works: 

• In our case, Optimist Ventures invests a $25,000 SPA Note alongside a $25,000 grant (administered by Optimist Ventures). The following examples are based on our fund structure, but they are adaptable to any amount or repayment schedule.

• Founders make quarterly payments over a six-year term, as long as the company is operating and generating revenue. 

• If the company turns a profit over $120,000 and under $180,000 in a calendar year, 5% of net profit is shared with Optimist Ventures (less what was paid in quarterly installments). 

  • Anything less than $120,000 is paid back at $6,000

  • Anything over $180,000 is capped at a total of $9,000

  • These payments continue for up to six years.

• Net, Founders receive $50,000 and return $36,000-$54,000 over 6 years.

  • That's between a -10% and 1.5% effective interest rate.

But it’s not debt—there’s no compounding interest, no maturity default, no liens.  It’s not equity—there’s no dilution unless there's a liquidity event.  It’s something in between yet befitting tech-enabled lifestyle business investments. It’s something new. 

Why It Matters to Founders and Investors 

For founders, this structure provides access to capital without giving up control or future upside too early. Payments are tied to earnings, not arbitrary timelines. Growth isn’t penalized. And if you do raise a Series A or B, the terms of the SPA Note don’t change—you continue to make the shared earnings payments without triggering equity conversion. The SAFE only activates if your company exits or is acquired. 

For investors, it means an earlier, more predictable return profile. Rather than waiting for a 10-year exit, the shared earnings begin as soon as the company is operating profitably. And if the company does have a big exit, then the SAFE kicks in and accelerates the full repayment. 

This dual structure allows us to back companies that may not be “VC-scale” in traditional terms—because success doesn’t have to mean unicorn status. It can mean profitability, sustainability, and community impact. It can mean jobs created, founders thriving, and missions accomplished. 

Evolving with the Market 

The truth is, early-stage capital needs to evolve. The binary choice between debt and equity no longer serves the nuance of today’s entrepreneurial landscape. We need options that are flexible, founder-friendly, and still aligned with investor outcomes. 

That’s what the SPA Note is designed to do. And that’s why we’re sharing this letter—so that future investors, fellow founders, and ecosystem partners can understand this instrument not just as a workaround, but as a new path forward. 

We’re proud to partner with founders willing to try something new. And we’re equally proud to bring our LPs and community along on this journey with transparency, creativity, and optimism. 

Something’s about to happen,  

Jeffrey Kaplan 

CEO, Optimist Ventures 

Director, Venture Asheville