// Funding mechanics & the Year-1 budget

Funding & the Year-1 Budget

How David's capital is held and released, and exactly where the ~$1.121M Stage-1 startup goes — less than half a million to PROVE it, and the rest buys the first firm. The money is committed once, called in gated waves as acquisitions close, into company accounts Steve operates under a written agreement — never a lump sum handed to one person. Illustrative planning figures; confirm with counsel and a CPA.

How the money works
1 · Company accounts, not personal

The money lives in the business

Bank accounts are opened in the names of The Verified Companies, LLC (HoldCo) and its operating divisions — not in Steve's or David's personal name. Capital is company property from day one.

2 · Committed, then called

Funded in gated waves

David commits ~$10M in the operating agreement but funds it in waves. He wires the ~$1.121M Stage-1 startup into the company account at close — ~$461k to prove the system plus ~$660k to buy the first electrical firm (alongside a ~$550k seller note); later acquisition waves release only as each trade proves out and deals close. There is never $10M — or even a full wave — sitting under one person's sole control.

3 · Operated with guardrails

Steve runs it; David has oversight

Steve is the day-to-day signer (payroll, gear, marketing, jobs). David gets monthly reporting, the Besins controller reviewing the books, Sarah on QuickBooks, and consent rights on Major Decisions above ~$100k (acquisitions, big commitments).

4 · Capital comes back first

David is paid ahead of the operator

The waterfall — return of capital → 10% preferred → 55/45 split — puts David's money and priority return ahead of any operator carry. The structure keeps both sides aligned on the same exit.

Money follows proof, not optimism. Each wave releases only once the prior integrations have proven out and deals are ready to close, so a stall simply stops the next wave — gating limits how much is ever committed ahead of proof. The written operating agreement fixes Steve's authority, David's consent rights, the reporting cadence, and for-cause-only removal, so everyone knows the rules before a dollar moves.

The Stage-1 startup — where the ~$1.121M goes
Stage 1 startup use of funds · prove The Verified System (~$461k) + buy the first firm (~$660k) · while Steve is under contract · $ thousands
CategoryAmountWhat it covers
The Verified System (build)$40kThe product Verified sells to owners: AI back office + JobTread + the standardized iPad / phone / network field kit + playbooks + the Verified estimation process, configured and built in the opening weeks while Steve is under contract — software, licenses, and setup
Team & payroll (before revenue, loaded)$215kThe biggest line — payroll ahead of revenue. Sarah from day one (~$25k partial-year), Adrian's electric crew (~$80k), an estimator on early (~$80k — estimating is the trades' profit lever), and Steve's founder draw (~$30k = $2,500/mo starter, while still on his full McCully pay), loaded and carried until electric cash-flows
Adrian's truck & field kit$62kWrapped used gas cargo van (Transit/ProMaster) + upfit, the first electric crew's tools & panel gear, and the standardized iPad / phone / network field kit
Entity, legal & licensing$35kHoldCo + OpCos, operating agreement, Icarus KB-1/A reinstatement, Adrian's electrical QP, CPA/QuickBooks setup
Marketing & lead-gen$35kThe panel-upgrade demand engine (AI-first digital + direct mail) and brand/website — the hook that gets the first truck rolling
Insurance & bonding$30kGeneral liability, workers' comp, license bonds, commercial auto — full coverage day one
Office (deliberately minimal)$30kA war room, two small offices, conference, kitchen/bath — with 1 Mac mini + 1 MacBook Pro, 2 large TVs, and minor furniture. Not a fancy build-out
Contingency / reserve$14kBuffer for timing and overruns
Subtotal — prove The Verified System~$461kLess than half a million to PROVE it — builds the sellable system, stands up the licensed electric entity, and gets the first truck on the road
First electrical firm (acquisition)$660kThe Stage-1 startup also buys the first electrical firm — equity cash into the close, alongside a ~$550k seller note. This is no longer prove-only; it lands the first acquisition
Total — Stage 1 startup~$1.121MOf David's ~$10M commitment, released at close to prove the system and buy the first firm (+ ~$550k seller note)
Capital goes to proof, the sellable system, crews, and the first firm — not a fancy office. The prove phase is ~$461k — less than half a million to PROVE it: it builds the product Verified sells (AI + JobTread + the field kit + playbooks + the Verified estimation process) while Steve is still under contract, stands up the licensed electric entity with an estimator on early, and gets the first truck on the road — with payroll before revenue as the largest line and a deliberately minimal ~$30k office. The full ~$1.121M Stage-1 startup also buys the first electrical firm (~$660k equity + ~$550k seller note). The scale capital — ~$10M of equity plus ~$6M of acquisition debt and seller notes — is called later, in gated waves as acquisitions close, only once the system and electric are proven.
Illustrative planning budget. Figures are estimates to be confirmed with a CPA and counsel, not a forecast or a guarantee. Line-item detail is maintained in the working budget model. Capital release, authority, reporting, and consent rights are governed by the operating agreement and the governance terms elsewhere in this package.