Exceptional Founder Downside Protection Fund

Bet on yourself
without betting
everything.

Building a company is the most asymmetric bet most people will ever make. You stake your time, your savings, your relationships, your health — on a roughly six-in-ten chance of nothing. For the first time, the EFDPF puts a floor under that bet. Pledge a slice of your founder stock, and if your company fails, we pay you back in cash. Build faster. Decide bolder. Sleep at night.

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~60%
of startups fail. Today, your downside is zero.
100%
cash recovery of pledged value if your company fails.†
Year 3
borrowing facility available against your future payout.†
See How It Works
The Problem

The startup gamble has
never had a floor. Until now.

Worked example: a founder with $10M of founder stock today pledges $1M (10%) into the EFDPF. Outcomes by company exit scenario:

If your company
fails
Modest exit
(5×)
Home run
(50×)
Without
EFDPF
$0
Your founder stock is worth nothing. Years of work gone.
$50M
Full upside on your stock — paper wealth until the exit clears, however long that takes.
$500M
Maximum upside on your stock. Same paper-wealth caveat.
With
EFDPF
$1M
RTM pays you 100% of your pledged value in cash. Your downside has a floor.†
$45M
You kept 90% of your founder stock, and 90% of the upside.
$450M
Same 90% retention. You sacrificed 10% of your upside to ensure you had no downside.
Certainty is a competitive advantage.
Founders who can stop worrying about their downside
make better decisions on the upside.
How It Works

Three steps.
Ten-year horizon.

EFDPF is a pledge-and-payout structure. You pledge a slice of your founder stock to RTM today, in exchange for a guaranteed cash payout at year 10 if your company has failed in the interim. Liquidity against that future payout becomes available from around year 3.

01
Pledge up to 10% of your founder stock
You transfer up to 10% of your founder shares to RTM at today's valuation. Voting rights are returned to you via a proxy arrangement, so you retain full control of your company. The pledge is structured to avoid a taxable event at the time of transfer.†
02
Build for the next ten years
RTM holds the pledged shares passively for the life of the contract. You build your company. The protection is in place from day one — and remains in place whether your startup raises again, exits, or shuts down.
03
Settle at maturity — or borrow earlier
If your company has failed by year 10, RTM pays you 100% of the original cash value of the shares you pledged. From around year 3, you can borrow against the future payout at institutional rates.
The Math

A floor under your downside.
A small toll on your upside.

Pledging 10% of founder stock reshapes your payoff distribution: catastrophic outcomes are eliminated, the upside is reduced by a constant 10% across every successful exit scenario.

Probability of any positive recovery
For a typical seed-stage founder facing a ~60% failure rate, EFDPF eliminates the most painful tail outcome — walking away with nothing. Probability of any positive recovery moves from roughly 40% to ~100%.2
Failure rates calibrated to the AngelList historical seed-stage distribution (Othman, 2019).
Founder payoff — by exit outcome
Founder's $ recovery across exit scenarios, for a worked example: $10M of founder stock today, $1M pledged into the EFDPF. The EFDPF line carries a floor of $1M at the failure outcome, then sits 10% below the unprotected line for every successful exit.
Illustrative example. Actual recovery depends on contract terms, definition of company failure, and pledge percentage at close.

The intuition is straightforward. A founder's wealth is concentrated in a single, high-variance asset: their own company's stock. Without protection, your wealth follows the company's outcome — a long flat tail at zero, and a heavy right tail of multibillion-dollar exits. The shape is good in expectation, but only because of the very largest outcomes. For any individual founder, the most likely single result is zero.

The EFDPF lets you trade a small share of the upside — 10% of your founder stock — for the elimination of the zero outcome. The mathematical exchange is favourable for almost any risk-averse founder: you give up a fixed fraction of every successful exit, and in return you remove the catastrophic outcome from the distribution entirely. Concentrated risk doesn't compound; it cancels.

However, the non-financial benefit may matter as much as the financial one. Founders who can stop worrying about personal financial ruin make sharper decisions: hire ahead of demand, walk away from bad acquirers, push through difficult conversations with co-founders and boards. EFDPF buys you that posture, contractually, for 10 years.

Earlier Liquidity

You don't have to wait ten years.

The full cash payout settles at year 10. But from around year 3, you can borrow against the future payout at institutional rates — turning what was an option into a usable financial asset much earlier.

Stage 1 Year 0–3 Contract live
Protection is in place from day one
Pledged shares sit with RTM. Your downside floor is contractually live. You no longer carry the full weight of personal financial wipeout if your company fails.
Without EFDPF
Your downside remains zero. No floor. Every strategic decision is shaped by personal financial fear.
Stage 2 ~Year 3 Borrowing facility opens
Borrow against your future payout
RTM arranges an institutional debt facility allowing you to borrow against the present value of your year-10 payout, at institutional rates — the kind of pricing typically reserved for endowments and family offices, not individual founders.Further, it's not tied to your credit-worthiness or current financial situation; rather it is collateralized about the payout.†
Without EFDPF
Borrowing against private founder stock is generally unavailable until your company is worth billions — if ever. Personal credit at retail rates is your only option if your company is successful; and, if your company has failed, you clearly don't have an option to borrow against those shares.
Stage 3 Year 10 Maturity
Settle in cash
If your company has failed: RTM pays you 100% of the original cash value of your pledged shares, in cash, at year 10.† If your company succeeded: RTM retains the pledged shares; you walk away with the remaining ~90% of your founder stock.
Without EFDPF
A failed company at year 10 returns nothing. A successful company may have liquidity by then, or may not — IPOs now average 14+ years from founding.
Who It's For

Founders at every stage
from seed to Series C.

EFDPF is available to founders whose primary wealth is concentrated in their own company stock — and who would benefit from converting some of that concentration into certainty. Premiums and pledge terms vary by stage and are finalised at close.

Seed
Early-stage founders
You've raised your seed round and your founder stock has a defensible current valuation. The pledge floor offers protection at the stage where it's most needed.
Series A
Post product-market fit
A priced round has set a market valuation. EFDPF gives you a way to crystallise a portion of that paper wealth without selling shares or triggering a tax event.
Series B
Scaling, locked up
Your company is worth tens to hundreds of millions, your secondary options are limited, and most of your net worth is in shares you can't touch. EFDPF unlocks contractual certainty.
Series C
Pre-IPO, concentrated
You're in the long pre-IPO stretch. The base case is success — but the tail risk is meaningful, and a $1M+ pledge converts a small slice of your equity into a year-10 cash floor.
Get In Touch

Stop betting everything.

Register your interest below. We'll follow up to walk through pledge terms, premiums, and the legal structure based on your company's stage and current valuation.

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Important disclosures

Not an offer; not a solicitation. This page is for informational and illustrative purposes only. It is not an offer to sell, or a solicitation of an offer to buy, any security, interest in any fund, or other financial product. Any offering will be made only by a confidential private placement memorandum and definitive transaction documents to qualifying counterparties.

Terms not yet final. Pledge percentages, premium rates, the institutional borrowing facility, payout amounts, and the definition of "company failure" are described above for illustrative purposes only. Final terms will be set in the transaction documents at the time of close and may differ materially from the descriptions on this page. Eligibility, pricing, and structure are determined case by case.

Not insurance. The EFDPF is not an insurance product, is not regulated by any state insurance commissioner, and does not provide insurance coverage. It is a contractual financial arrangement between the founder and Rising Tide Management (or an affiliated entity). Founders should consult their own legal and tax advisors regarding the characterisation of the contract for their circumstances.

Hypothetical and illustrative figures. Dollar amounts, percentages, and worked examples on this page (including the $10M founder stock / $1M pledge example, exit multiples, and the charts in "The Math" section) are hypothetical illustrations. They do not reflect actual transactions, actual recoveries, or any representation about what any individual founder may receive. Calibration of failure-rate statistics references the AngelList early-stage dataset (Othman, 2019); past data is not predictive of future outcomes for any individual company.

Forward-looking statements. Statements about how the product will operate over a ten-year horizon, the timing of liquidity, expected borrowing facility terms, and expected outcomes are forward-looking and subject to risks and uncertainties — including regulatory developments, market conditions, the financial condition of Rising Tide Management and its affiliates, and the actual performance of pledged founder companies.

Risk of loss; opportunity cost. Pledging founder stock means surrendering the upside on the pledged shares. In successful-exit scenarios, the founder will receive less than they would have without the EFDPF — the difference equals the pledged share count times the realised per-share value. Founders considering this product should weigh the value of downside protection against the foregone upside, taking into account their personal financial circumstances and tax position.

Tax treatment. The federal income tax treatment of the pledge, premium payments (if any), and the cash payout depends on the final contract structure and the founder's specific circumstances. The pledge is intended to be structured to avoid an immediate taxable event at transfer, but this is not guaranteed and may depend on jurisdiction and individual facts. Founders should consult their own tax advisors before entering into any contract.

Borrowing facility subject to availability. The institutional debt facility referenced in "The Liquidity Ladder" is contingent on Rising Tide Management arranging credit lines with institutional lenders on satisfactory terms. Availability, credit availability, and rates offered to any individual founder are subject to underwriting and may be more restrictive than described.

"Company failure" defined in transaction documents. The triggering event for the cash payout — the definition of "company failure" — will be specifically defined in the transaction documents and may include events such as bankruptcy, dissolution, assignment for the benefit of creditors, or other defined liquidation events. It is not a measure of share price decline or interim valuation. Founders should review the definition carefully before signing.