The Programmable Term Sheet: How Continuous Capital Automates the Inflection Point

Aki Kakko
15 hours ago
3 min read

Traditional venture capital is a high-friction service business. It relies on "the pitch"—a low-resolution, retrospective snapshot of a company’s history. Because the process of diligence, valuation, and legal closing takes weeks or months, the traditional model is structurally incapable of capturing the most explosive part of a company’s growth curve: the Inception Slope.

To scale venture capital to the speed of the modern software economy, the model must shift from "Manual Selection" to "Systematic Infrastructure." This is the era of Continuous Capital.

The Case Study: LogiTrack AI

Imagine LogiTrack AI, a mid-stack SaaS platform that helps small e-commerce brands optimize shipping routes and warehouse picking.

The Inflection Point: On a Monday, a logistics bottleneck at a major port forces thousands of SMBs to look for alternative routing.
The Signal: LogiTrack’s "Predictive Re-routing" feature sees a 1,200% spike in usage. This isn't just "hype"—it’s a massive increase in Compute Intensity and Utility Value.
The Friction: In a traditional model, the founder would spend the next three weeks building a deck to raise "bridge" capital to cover the scaling costs. In the Continuous Capital model, the funding is already triggered.

The Trigger: Behavioral Inception

The system is integrated directly into the company’s operating stack (via VentureOS: Stripe, AWS usage etc.). We don't wait for a financial statement. We track the second derivative of growth—the acceleration of behavior.

The Metric: We monitor "Feature Velocity" and "DAU/MAU Intensity."
The Action: When the system detects a statistically significant break in the trend line, it triggers a Programmatic Capital Advance. This is "Just-in-Time" funding that arrives exactly when the operational "burn" requires it.

The Valuation: Algorithmic Equity Pricing

Valuation in traditional VC is often a "finger in the wind" exercise based on the last round or what a competitor paid. In a Continuous Capital model, valuation is an algorithmic function of real-time unit economics. We use several different formulas e.g. Velocity-Adjusted Enterprise Value (VAEV).

VAEV Valuation = (ARR forward × M) × (1+α)

ARR forward: The current monthly revenue run-rate.
M (The Base Multiplier): A baseline industry multiple (e.g., 10x for SaaS).
α (The Acceleration Factor): A premium calculated based on the rate of change in user retention and acquisition efficiency (LTV/CAC).

Example: LogiTrack AI is at $500k ARR. Normally, it might be valued at 5M. However, its α is spiking because its CAC is dropping while usage is soaring. The system automatically adjusts the valuation to $8M and offers a $250k "Growth Tranche." The investor doesn't have to "pick" the valuation; the data dictates it.

This creates an Arbitrage of Time: you are buying equity at the "Inception Price" before the broader market recognizes the shift.

The Legal Framework: The Master Venture Agreement (MVA)

The biggest bottleneck in venture is not the money; it is the legal documentation. To fund a company in minutes, you must move the legal work to the Onboarding Phase. Upon joining the infrastructure, the founder signs a Master Venture Agreement (MVA). This is a foundational "Operating System" for the company’s capital structure.

Pre-Negotiated Rights: The MVA pre-defines governance, information rights, and dilution protections. It eliminates the need for a new "Term Sheet" for every check.
The Algorithmic Issuance Clause: This clause stipulates that "The acceptance of a Programmatic Advance constitutes a legal issuance of equity/convertible debt at the price determined by the Valuation Algorithm."
Smart SAFEs: The equity is issued via a digital ledger. When the $250k hits the company’s bank account, the Cap Table updates automatically. There are no signature pages, no wire-confirmations, and no $20,000 legal bills.

The Investor Outcome: From "Gamble" to "Index"

In this model, the investor is no longer a "trader" looking for a single 100x lottery ticket. They are an infrastructure provider owning a slice of the "Inception Layer" of the economy.

Dynamic Option Sizing: You don't write one big check and hope. You write 100 small "Inception Checks" ($50k) and dynamically increase your option size as the data proves the Power Law is taking effect.
Continuous Compounding: Because the capital is "Permanent" (not tied to a 10-year fund exit), the returns can be recycled into the next "Inflection Point" without the tax drag and friction of returning capital to LPs.

The traditional venture model is a Realization Machine—it is designed to force an exit. Continuous Capital is an Ownership Engine.

By automating the legal hurdles and tying valuation to real-time behavioral physics, we move from a world of "Selective Betting" to "Systematic Compounding." We don't fund companies because a partner liked the pitch; we fund them because the math of their growth made the funding inevitable.