> For the complete documentation index, see [llms.txt](https://blueprint.builtbydao.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://blueprint.builtbydao.com/invest/use-of-funds.md).

# Use of Funds & Capital Stack

{% hint style="info" %}
Exactly where the proof round goes, and how a hub is capitalized. Of the $1.75M, only \~$601K is net cash — incentive-gated sourcing and stacked subsidy carry the rest.
{% endhint %}

## Round 1 — Sources & Uses

{% tabs %}
{% tab title="Uses" %}

| Line                          |     Amount | Note                                    |
| ----------------------------- | ---------: | --------------------------------------- |
| Acquisition                   |     \~$75K | Incentive-gated / land bank (near-free) |
| Buildout / zone fit-out       |      $400K | The 7-zone Foundry hub                  |
| Equipment                     |      $275K | Per-zone tooling                        |
| 12-month runway               |      $175K | Narrow cash burn                        |
| Operating reserve floor       |      $500K | Bridge to break-even                    |
| First homes (build-fund seed) |    \~$325K | Kickstarts the build fund               |
| **Total**                     | **$1.75M** |                                         |
| {% endtab %}                  |            |                                         |

{% tab title="Sources" %}

| Source                          | Share |  On $1.75M |
| ------------------------------- | :---: | ---------: |
| Investor equity                 |  30%  |      $525K |
| UA grant                        |  30%  |      $525K |
| Community / capital-member cash |  20%  |      $350K |
| Debt / CDFI                     |  20%  |      $350K |
| **Total**                       |  100% | **$1.75M** |
| {% endtab %}                    |       |            |
| {% endtabs %}                   |       |            |

```mermaid
pie showData
    title Round 1 capital stack — $1.75M
    "Investor equity" : 30
    "UA grant" : 30
    "Community / capital-member cash" : 20
    "Debt / CDFI" : 20
```

## The capital stack — designed to recede

* **Investor equity (30%)** — non-controlling, repayable, or capped-convertible; structured to step back as community equity accrues.
* **UA grants (30%)** — a *floor*, not a ceiling; the grants-first strategy maximizes it. Every grant dollar won shrinks the equity/debt residual.
* **Community / capital-member cash (20%)** — from capital and community-investor members only; **renters and builders enter via sweat, with no cash gate.**
* **Debt / CDFI (20%)** — \~22% LTV against owned facilities: conservative, cheap, financeable. Owned hubs are clean CDFI collateral.

## The standup, after incentives

Incentive-gated sourcing collapses the acquisition line (land bank), and ~~35% of standup is grant/TIF-covered (SNF · INVEST South/West · TIF · NOF · brownfield). Net effect: a hub that would carry a $1–2M market envelope needs only \*\*~~$601K of real cash\*\* to stand up.

## The build fund (annual, after standup)

Building homes each year needs cash beyond standup — but it largely refills itself:

|                                             |   Early (yr 1–2) | Stabilized (yr 5+) |
| ------------------------------------------- | ---------------: | -----------------: |
| Units built / yr                            |               18 |                 30 |
| Cash needed to build                        |           $3.84M |             $5.53M |
| Sold-unit proceeds (40% at value, recycled) |           $1.40M |             $2.34M |
| Conservative debt (held collateral × LTV)   |           $0.46M |             $0.77M |
| **Grants / subsidy (the gap-filler)**       | **$1.97M (51%)** |   **$2.42M (44%)** |
| Incremental debt service / yr               |             $25K |               $42K |

The subsidy share lands right on the researched **35–40% viability gate** — higher early (credit is thin, cash cost higher), settling lower as homes get cheaper and collateral grows. Debt service is carried in the P\&L.

{% content-ref url="/pages/cxpedDRSDv2tK0qNPFDf" %}
[The Proof Gate](/invest/proof-gate.md)
{% endcontent-ref %}

{% content-ref url="/pages/koICf9531jjlIT5PMEYS" %}
[The Financial Model](/invest/financial-model.md)
{% endcontent-ref %}


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