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Distributions are the core returns mechanism in the Backerville ecosystem, transforming private company liquidity events into tangible returns for village members through an automated and programmatic process.

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📋 Overview

Automated Distribution Process Flow
When portfolio companies experience liquidity events, Backerville’s system automatically processes and distributes the proceeds to village members. This algorithmic process ensures transparency, compliance, and efficient allocation of returns with minimal human intervention.

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🚀 Triggering Event Process

  • Self-Reporting & Processing
  • Receipt Channels
  • Processing Periods
1

Event Notification

The villager notifies Backerville of the liquidity event through the platform
2

Automated Valuation

System applies standardized valuation methodology to determine the value of proceeds
3

Algorithmic Entitlement Calculation

Algorithm automatically calculates each village’s entitlement based on promissory note holdings
4

Automated Member Notification

System sends notifications to members about the upcoming distribution

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🔄 Algorithmic Distribution Preparation

Automated Distribution Calculation

System automatically calculates each member’s share based on ownership percentage

Automated Tax Documentation

System generates required tax forms for distributions

Automated Currency Conversion

For international transactions, automatic conversion to members’ preferred currencies

Compliance Verification

Automated compliance checks with regulatory requirements

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Distribution Calculation Process

The distribution calculation follows precise algorithmic formulas to ensure equitable allocation of proceeds based on village membership and promissory note ownership.
1

Village-Level Allocation

Total proceeds are automatically allocated to villages based on their proportional ownership of the promissory note for the company experiencing the liquidity event
2

Member-Level Calculation

Each village’s proceeds are then automatically allocated to members based on their unit ownership in the village
3

Fee Calculation

Applicable administrative and service fees are automatically calculated and deducted
4

Net Distribution Calculation

Final net amount for each member is automatically calculated after all deductions

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Compliance Verification

The system includes automated compliance checks:
All distribution calculations undergo automated validation against established formulas and rules.
Automated checks ensure distributions comply with relevant regulations for different jurisdictions.
System automatically flags unusual patterns or exceptions for review.
All distribution documentation is automatically archived for future reference and audit purposes.

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💸 Distribution Mechanisms

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Standard Distributions

Liquidity Event: Company liquidation or share sale
Day 1: Self-reporting and automated calculation
Day 1-2: Automated member notification and documentation preparation
Day 2-3: Funds transfer to members
Day 3-4: Distribution confirmation and documentation
Standard distributions follow an automated process:
  1. Programmatic Direct Deposit: Automatic electronic transfers to member-designated accounts
  2. Automated Distribution Notice: System-generated detailed breakdown of the calculation
  3. Automated Tax Documentation: System-generated appropriate tax forms for reporting purposes
  4. Digital Reinvestment Option: Self-service option to reinvest proceeds into new villages or the Super Fund

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Special Distribution Scenarios

  • Partial Liquidity Events
  • Non-Cash Distributions
When only a portion of a company’s shares are sold, the system automatically calculates distributions proportionally based on the percentage of the promissory note that was liquidated.
For staged exits, the system manages a series of distributions as each portion of the liquidation occurs, with automated documentation linking the distributions to the same original event.
When proceeds include both cash and stock, the system handles distributions in both forms according to predefined rules, with members able to set preferences for handling different asset types.

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Superfund Investor Distributions

Superfund investors receive distributions through an automated process that:
  • Calculates returns based on their proportional ownership in the Superfund
  • Applies the appropriate waterfall structure according to Superfund terms
  • Provides comprehensive reporting on underlying investment performance
  • Automated quarterly distribution schedule
  • Option to automatically reinvest proceeds
  • Enhanced reporting on portfolio company performance
  • Specialized tax documentation for fund investors
Superfund investors receive consolidated reporting that shows:
  • Direct village investments (if applicable)
  • Superfund investments
  • Total portfolio performance metrics

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Reinvestment Options

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Distribution Proceeds

Total funds available for distribution or reinvestment

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Reinvestment Options

Choose how to allocate your proceeds

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Cash Distribution

Funds sent directly to your bank account

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Village Reinvestment

Allocate funds to new village units

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Super Fund Reinvestment

Allocate funds to Super Fund shares

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Mixed Approach

Combination of cash distribution and reinvestment

Members have flexible self-service reinvestment options:

Full Cash Distribution

Default option if no action taken

Village Reinvestment

Self-service option to reinvest into same or different villages

Super Fund Reinvestment

Self-service option to invest in Super Fund shares

Mixed Approach

Self-service configuration of percentages for each option

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Fee Structure

  • Membership Fee
  • Service Fee
  • Expense Reimbursement
Variable
Monthly Membership Fee
Payment options include:
  • Standard monthly payment
  • Discounted annual prepayment
  • Deduction from distributions (subject to premium)
Covers platform access, reporting, and basic administrative services

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Tax Implications

  • U.S. Members
  • International Members
  • Crypto Tax Considerations
Distributions are generally characterized as:
  • Capital gains (short or long-term depending on holding period)
  • Return of capital (non-taxable up to investment amount)
  • Ordinary income (in some special situations)
Members receive system-generated:
  • Schedule K-1 for partnership structures
  • Form 1099-B for broker transactions
  • Detailed transaction summary for tax preparation
Generally, no withholding is required for U.S. members, but members are responsible for estimated tax payments if needed.

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Automated Communication

Automated Pre-Distribution Notice

System sends notification 1-2 days before distribution with event details and expected timeline

Automated Distribution Confirmation

System sends confirmation on distribution day with complete breakdown of calculation and payment details

Automated Tax Documentation

System generates and sends necessary forms for tax filing

Automated Annual Summary

System generates comprehensive annual summary of all distributions and their tax treatment

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System Governance

Robust system controls ensure distributions are accurate, timely, and compliant with all legal and regulatory requirements.
The distribution system includes several governance safeguards:
All distribution calculations use transparent formulas with built-in consistency checks and validation.
Members have access to a self-service resolution process for distribution-related concerns, with escalation paths available when needed.
The distribution system automatically enforces compliance with:
  • Securities regulations
  • Tax reporting requirements
  • Anti-money laundering provisions
  • Banking regulations
All distribution-related information is automatically documented and available to members through their dashboard, including:
  • Detailed calculation methodologies
  • Fee structures and applications
  • Underlying transaction documentation (subject to confidentiality restrictions)