Announcing our Re-Structure
[For the original story, click here]
Over the last few months, we’ve mentioned the impending creation of a second business line named {Codename: E-lixr}. After much detailed consideration, we’ve moved forward with separating this “e-boat transportation” entity from the hospitality operations. In this email, we’re going to discuss how this was done, what it means for the company, investors, and what’s next.
To date, ARKHAUS has raised a $900K preseed raise and is nearing close of a $3mm seed round ($1.75mm closed, $1.25mm remaining). All of this investment was completed in the ARKHAUS Inc entity.
Rather than spinning out {C:E} into a fully separate entity, we decided to create 2 sub-entities under the existing ARKHAUS Inc entity, making that the parent-holding company. Then we moved the hospitality business into the ARKHAUS Club sub-entity and the new/future e-boat transport business into E-lixr Inc.
By separating these 2 business lines into sub-entities under a parent, they will continue to have many benefits (shared management, shared expenses, consolidated tax filing and profit/loss offset), but also be able to raise capital effectively and operate independently.
In addition, ARKHAUS Club will contract and pay E-lixr Inc to provide the tender service for its members which 1) alleviates ARKHAUS of that major task and 2) provides E-lixr with a major beta customer as it launches into its own growth trajectory.
What Does This Mean For Existing Investors?
If you invested at the parent level (which is the case for every investor thus far), you are effectively an owner of both sub-entities. You will benefit from the growth, economics, and eventual exit of both subs as if you had invested in them directly. We are very thankful for your investment, support, and faith…and wanted to make sure we did this the right way to honor and maximize your investment.
What About Future Investment?
We’ll continue to close the current $3mm round out at the parent entity, ARKHAUS Inc (at $25mm valuation cap). This is the last investment we will accept at the parent entity, which will benefit from both subsidiary business lines.
Future investment will happen at the separate subsidiaries, which will result in less dilution for you as parent entity investors.
Future club locations will be capitalized at this sub-entity.
We retain the option to raise capital now, at a lower valuation, with the {C:E} business and value now separated out.
{C:E} is now raising it’s pre-seed round of $1.5mm, and taking indications of interest. You can learn more here:
We recognize this wasn’t the simplest transaction, but this was the best way to do right by you as our investors and lay the foundation for two business lines that support and help each other grow.
As always, if you have any questions, please reach out to me.
Sam Payrovi
CEO & Co-Founder
