First tranche
$500K
Invested through the Gateway X PROFIT Agreement at a $5 million post-money valuation.
Founders have been told to pick a side: chase a unicorn and answer to a board, or stay small and call it a lifestyle. There's a third path.
The GX PROFIT Agreement Pack
We're creating a new standard for builders in an AI era who want to raise one round of capital and grow with profits. Seedstrapping gives you early fuel, a path to profitability, and the freedom to keep building on your terms. A dollar of profit is infinite runway.
Non-binding key terms (PDF)
The deal.
We have a standard deal for companies accepted to the Gateway X Fellowship.
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Up to $1M in funding. We invest $500K for 10% at signing through the GX SAFE. Another $500K is available at the same $5 million post-money valuation within two years. Once you reach both the revenue and EBITDA milestones, the $500k is yours.
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Results, not just "value add". We bring prospects, customers, talent, direct coaching, not just capital, during the Fellowship and after it ends.
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Speed. Once we accept, we will wire immediately when the deal closes, and start working together right away.
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Rounds run out. Freedom compounds. We structure the deal so when you win, we win. We aim to be the only capital partner you ever need, helping your business grow and distribute profits.
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No board seat at the start. Founders should control their boards at this stage. Gateway X begins as an observer and asks for a seat only if the board expands beyond the founding team.
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Take care of employees. At the second close, we ask you to set aside an intended 10% pre-money employee option or profit-interest pool so you can build the best, small and mighty team. We can help set up the pool and your company as needed.
Profit gives you options.
Options give you freedom.
Designed for the way
you want to build.
The PROFIT Agreement (Preferred Round for Ownership, Freedom, Independence & Traction) is built around four principles.
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01
A new standard
Early capital designed to hand growth back to revenue, not another fundraising cycle.
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02
Simple
Two $500,000 investments, one $5 million post-money valuation, and one document sequence.
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03
Predictable
See the milestones, timing, documents, and 20% ownership target before you sign.
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04
Profit preferred
Preferred-stock economics aligned with profitable growth. Aligned incentives, a simple cap table.
THE FUNDING MODEL
Two investments.
One clear path.
We invest up to $1 million in two $500,000 tranches. Both use the same $5 million post-money valuation.
Milestone
Both conditions must be true
Measured at any point within two years of signing.
$500K
Trailing 3-month revenue
AND
$25K
Trailing 3-month EBITDA
Second tranche
$500K
Both $500K tranches convert into Series Profit Preferred Stock at the $5 million cap.
Gateway X can invest
We may invest the second $500,000 at any time during the two-year window, regardless of the milestone conditions.
Gateway X will invest
We are guaranteed to invest the second $500,000 if both milestone conditions are met during the two year window.
THE RESULT
$1M total
Gateway X owns 20% after the second tranche is invested.
Three documents.
One agreement.
The Gateway X PROFIT Agreement set carries the deal from first check to preferred stock.
Designed to be fast, simple, and founder friendly.
At signing
GX SAFE
Quickly funds the first $500,000 and sets the conversion mechanics.
At signing
GX Side Letter
Covers investor rights, founder commitments, and the second-tranche framework.
At the second close
GX Series Profit Preferred Docs
Issues the preferred stock and carries the agreed economics and control rights forward.
Key terms ready to download
This PDF is a non-binding commercial summary. Counsel is preparing the definitive documents, and the signed set will control.
Know the words.
Know the deal.
A short glossary for the terms used across the Gateway X PROFIT Agreement.
- Post-money valuation
- The agreed company value immediately after an investment. Both tranches use a $5 million post-money valuation.
- Tranche
- One portion of an investment. Gateway X invests $500,000 at signing and may invest a second $500,000 within two years.
- Trailing three months
- A rolling look at the company's most recent three months. The final documents will define measurement dates and evidence.
- EBITDA
- Earnings before interest, taxes, depreciation, and amortization. The final documents will define the exact adjustments used here.
- Conversion
- The GX SAFE becomes Series Profit Preferred Stock when the second closing occurs.
- Series Profit Preferred Stock
- The preferred shares issued at the second close, with the economics and control rights described below.
- Pro rata rights
- Gateway X's right, not obligation, to invest in a future financing to maintain its ownership percentage.
- MFN
- Most Favored Nation. If a qualifying later investment has better terms, Gateway X can receive that benefit.
- Liquidation preference
- On an exit, Gateway X receives either 1x its investment or the as-converted amount, whichever is greater.
- Protective provisions
- A limited list of major company actions that require Gateway X consent while the agreed ownership threshold is met.
- Anti-dilution
- A broad-based weighted-average adjustment that protects preferred holders if shares are later issued at a lower price.
- Board observer
- A non-voting role that lets Gateway X observe the board until the full-seat trigger is met.
These definitions explain the intended commercial structure. The signed documents will control the exact legal meaning.
The fine print.
In plain English.
Everything above, organized by the document and closing stage where it lives.
This is the intended commercial deal, not legal advice. The definitive Gateway X PROFIT Agreement document set set will govern.
First close$500K
Second close$500K
Post-money valuation$5M
Gateway X ownership target20%
01In the GX SAFE, at first close
- $500,000 initial investment through the Gateway X PROFIT Agreement.
- $5 million post-money valuation for the first investment.
- Conversion at the same valuation when the second closing occurs.
02In the GX Side Letter, at first close
- Pro rata rights: Gateway X can maintain its ownership in a future financing.
- Dividend alignment: Gateway X shares in board-declared dividends paid to stockholders. The documents do not force distributions.
- Founder commitment: The fellowship expectations are non-binding and based on the founder's word.
- MFN rights: If the company later issues a qualifying investment on better terms, Gateway X can receive that benefit.
- Information rights: Gateway X receives unaudited financials, an annual budget, and other basic company information.
- Board rights: Gateway X receives an observer seat and the right to a full seat when a board including anyone other than the founder or founders is contemplated.
- Second-tranche framework: Gateway X may invest another $500,000 at any time during the two years after signing. Gateway X is obligated to invest it if the company reaches both $500,000 in trailing-three-month revenue and $25,000 in trailing-three-month EBITDA during that window.
Counsel will define the milestone calculation, verification process, funding deadline, company closing obligation, and treatment of intervening financings or capitalization changes.
03In the GX Series Profit Preferred Docs, at second close
- $500,000 of new money at a $5 million post-money valuation, with an intended 10% pre-money employee option or profit-interest pool to help the company attract and reward exceptional talent.
- $1 million invested for 20%: The GX SAFE converts at the same valuation. The structure is intended to leave Gateway X with 20% after the second tranche and talent pool.
- Series Profit Preferred Stock: On an exit, Gateway X receives either a 1x liquidation preference or the as-converted amount, whichever is greater.
- Non-cumulative dividends: Paid pro rata with other stockholders only when declared by the board.
- Conversion and anti-dilution: Standard conversion rights and broad-based weighted-average anti-dilution protection.
- Voting: Series Profit Preferred Stock votes with common stock on an as-converted basis.
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Protective provisions: While Gateway X holds at least 50% of its original Series Profit Preferred Stock, the company needs Gateway X's consent to:
- Amend its charter or bylaws.
- Create or issue a security senior to or on parity with Series Profit Preferred Stock.
- Redeem or repurchase stock, except unvested stock repurchased at cost from a departing service provider.
- Declare or pay a dividend outside the agreed terms.
- Sell the company or substantially all its assets, liquidate, dissolve, or complete an acquihire.
- Take on more than $100,000 of debt.
- Change the size of the board.
- Continuing rights: Gateway X's information, pro rata, and board rights carry forward from the GX Side Letter.
- Transfer and sale rights: Gateway X receives co-sale rights on insider transfers to minority investors and the agreed cash-out or liquidation-preference treatment on majority investments or a change of control.
The consent right above is not an investor redemption right. The definitive documents will control the exact transfer, sale, and change-of-control mechanics.
WHAT WE ASK OF EACH OTHER
A simple commitment
to each other.
01
You
- Build an ambitious, profitable business with one round of capital.
- Show up in St. Louis, including our 12-week Fellowship.
- Bring ambition, integrity, and a relentless desire to change your world.
These are not binding terms. We take you at your word.
02
Gateway X
- Invest capital, time, expertise, network, and 1:1 operating support.
- Help you reach traction and profitability faster than you could alone.
- Share in the upside when we create a meaningful value together.
We back your path & control, not endless fundraising.
QUESTIONS FOUNDERS ASK
Clear answers.
No runaround.
The basics are worth repeating. The signed documents will control the details.
01How much does Gateway X invest, and what does it own?
We invest up to $1 million in two $500,000 tranches. After the second tranche and employee option or profit-interest pool for attracting exceptional talent are in place, Gateway X owns 20%.
02When will Gateway X invest the second $500,000?
We can invest it at any time during the two years after signing. We will invest it if, during that window, the company reaches both $500,000 in trailing-three-month revenue and $25,000 in trailing-three-month EBITDA. One milestone alone is not enough.
03What if we miss the milestones or reach them after two years?
If both milestones are not reached during the two years after signing, Gateway X is not required to fund the second tranche under the milestone rule. Reaching them after the window does not trigger that obligation under this summary. The first $500,000 remains invested, and the signed documents will govern any later investment.
04What counts as revenue and EBITDA, and how are they verified?
The final documents will define the accounting rules, exclusions, evidence, notice, verification, and funding timing. The thresholds on this page are the approved commercial targets.
05What does the $5 million post-money valuation mean here?
Post-money means the agreed company value immediately after an investment. Both $500,000 tranches use a $5 million post-money valuation, and the definitive structure is intended to leave Gateway X with 20% after the second tranche and talent pool.
06What if we want to raise more money?
Yes. We will not stop you. But another round should be an option, not an obligation. Too many founders raise round after round and end up with little ownership or control. This deal is designed to help you raise from a position of strength, with traction and leverage. The signed documents govern Gateway X's MFN, pro rata, and second-tranche rights.
07Does PROFIT mean we have to share operating profit or pay dividends?
No. The documents do not force distributions. Gateway X participates in dividends only when they are declared by the board, alongside the agreed economics of its Series Profit Preferred Stock.
08Will Gateway X control my company?
Gateway X does not take day-to-day control. We begin with a board observer right and receive a full board seat when a board with anyone beyond the founder or founders is contemplated. A limited set of major company actions also requires Gateway X consent while the agreed ownership threshold is met.
09What am I committing to as a founder?
Build an ambitious, profitable company and show up in St. Louis for the 12-week Fellowship. These program commitments are non-binding. We take you at your word.
10Do we have to be a C-corporation?
The standard documents are designed for a C-corporation, but we are open to LLCs. We will work through any conversion, tax, and entity-specific documentation with you and counsel.
11What rights come with Series Profit Preferred Stock?
It includes a 1x liquidation preference or the as-converted amount, board-declared non-cumulative dividends, conversion and anti-dilution rights, voting rights, and consent rights over a limited set of major company actions.
12Why does the deal include an employee pool?
The intended 10% pre-money employee option or profit-interest pool is there to help you attract and reward exceptional people who can help your team win. The structure is intended to leave Gateway X with 20% after the second tranche and talent pool. The final documents will govern the capitalization mechanics.
13What happens if the company is sold before the second close?
The final documents will govern Gateway X's treatment in a sale or change of control. This commercial summary does not yet define how the second-tranche option behaves if a sale occurs during the two-year window.
14When will the full documents be available?
The plain-English term summary is available now. Counsel is preparing the definitive Gateway X PROFIT Agreement document set, which will control once signed.
15Should we review the documents with our own lawyer?
Yes. This page is a plain-English summary, not legal or tax advice. We're putting a focus on simplicity where we can, but you're encouraged to review the definitive documents with qualified counsel before signing.
Read the terms.
Then get back to building.
The full Gateway X PROFIT Agreement document set is being prepared by counsel.
Non-binding key terms (PDF)
This page is a plain-English summary for discussion only. It is not legal, tax, or investment advice. The signed Gateway X PROFIT Agreement document set will control.