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Cash-Cow Distribution Returns (working note)
Updated Jun 16, 2026 · Affirmology_CashCowReturns_Note_v1.md
Summary. Parked for later. Fold into the Friends and Family money doc when investor materials come back up. This models our ACTUAL plan: not selling the company, but distributing profit to members year after year as a cash cow. The return that matters is annual cash yi
Cash-Cow Distribution Returns (working note)
Parked for later. Fold into the Friends and Family money doc when investor materials come back up. This models our ACTUAL plan: not selling the company, but distributing profit to members year after year as a cash cow. The return that matters is annual cash yield and payback, not an exit multiple. Illustrative, not a promise. No em dashes.
The elegant core
- You own (your check / $1,500,000) of the company.
- Each year the company distributes a pool of profit to members, pro rata.
- Your annual cash = your ownership percent times the distribution pool.
- Because ownership percent = check / $1.5M, your annual YIELD equals the distribution pool divided by $1.5M. The SAME yield for every standard-tier investor, regardless of check size. Bigger checks just earn proportionally bigger dollars.
- Payback in years = $1,500,000 / annual distribution pool. The first year the company distributes $1.5M, every investor earns their whole investment back and still owns the stake.
- (Anchor/lead checks priced at a better entry than $1.5M, like Josh, earn a proportionally higher yield.)
Yield and payback by annual distribution pool (same for all standard-tier investors)
| Annual distribution pool |
Cash yield on your investment |
Years to full payback |
| $250k |
16.7% |
6.0 |
| $500k |
33.3% |
3.0 |
| $750k |
50.0% |
2.0 |
| $1.0M |
66.7% |
1.5 |
| $1.5M |
100% |
1.0 |
| $2.5M |
166.7% |
0.6 |
| $5.0M |
333% |
0.3 |
Your annual distribution by tier, at two illustrative pools
At a $500k per year pool (a modest cash cow, 33.3% yield):
| Check |
Stake |
Annual distribution |
| $5k |
0.33% |
$1,667 |
| $10k |
0.67% |
$3,333 |
| $15k |
1.00% |
$5,000 |
| $20k |
1.33% |
$6,667 |
| $25k |
1.67% |
$8,333 |
| $30k |
2.00% |
$10,000 |
At a $2M per year pool (a strong cash cow, 133% yield):
| Check |
Stake |
Annual distribution |
| $5k |
0.33% |
$6,667 |
| $10k |
0.67% |
$13,333 |
| $15k |
1.00% |
$20,000 |
| $20k |
1.33% |
$26,667 |
| $25k |
1.67% |
$33,333 |
| $30k |
2.00% |
$40,000 |
Cumulative cash returned over time, for a $10k check (you still own the stake after)
| Pool |
Annual |
After 3 yrs |
After 5 yrs |
After 10 yrs |
| $500k |
$3,333 |
$10k (1.0x) |
$16.7k (1.7x) |
$33.3k (3.3x) |
| $1M |
$6,667 |
$20k (2.0x) |
$33.3k (3.3x) |
$66.7k (6.7x) |
| $2M |
$13,333 |
$40k (4.0x) |
$66.7k (6.7x) |
$133.3k (13.3x) |
Held flat. A growing cash cow distributes more each year, so cumulative is higher, and you keep the income-producing ownership indefinitely.
Honest caveats (must stay in any investor-facing version)
- The clock starts at profitability, realistically 12 to 24 months out. Early years the pool may be small or zero while we reinvest to grow.
- The company chooses the distribution pool each year. In growth years it will reinvest rather than distribute the maximum. The pool is profit chosen for distribution, not all profit.
- Pass-through tax: as LLC members, investors are allocated their share of profit and may owe tax on allocated income even in a year the company distributes less than that allocation (phantom income). Talk to a tax advisor. Not tax or legal advice.
- These are illustrative figures chosen to show the mechanism across a range, not a forecast.
- Exit optionality remains as upside on top. If we ever sold or recapitalized, the ownership shares in that too. But the plan is the cash cow.
Why this framing is strong
This is income investing, closer to owning a piece of a profitable small business or a royalty than a venture lottery. No exit needed, ownership is permanent, and the return compounds every year it is held.