FiLo Curator

First Loss — Deal Sourcing & Risk Curation

FiLo Curators are the deal-sourcing and risk management layer of TIX Credit. They identify venue opportunities, perform due diligence, and may provide first-loss capital for higher-risk advances.

The Curator Role

In a revenue-based financing model, curators serve different functions than in asset-backed lending:

Traditional Lending	TIX Credit Curators
Appraise collateral value	Assess venue ticket potential
Manage liquidation	Monitor exclusivity compliance
Recover assets on default	Optimize deal structure
Price credit risk	Price volume risk

Curator Responsibilities

1. Deal Sourcing

Curators identify and source venue opportunities:

• Relationship building with venue operators

• Market analysis of entertainment markets

• Pipeline management of potential deals

• Competitive intelligence on ticketing market

2. Due Diligence

Before any advance, curators perform:

Category	Diligence Items
Venue Quality	Physical inspection, capacity, location, configuration
Operating History	Event count, ticket volume, revenue trends
Management	Team experience, track record, reputation
Financial	Current obligations, cash flow, insurance
Market	Competition, demand drivers, seasonality
Technical	Integration readiness, existing systems

3. Deal Structuring

Curators negotiate and structure terms:

• Advance amount — Based on projected volume

• Volume threshold — What triggers completion

• Time limit — Maximum contract duration

• Fee structure — Service fee and caps

• Exclusivity scope — Venues and events covered

4. Ongoing Monitoring

During the agreement term:

• Sales tracking — Monitor ticket volume vs. projections

• Compliance — Verify exclusivity adherence

• Relationship management — Support venue operations

• Issue resolution — Address disputes, technical issues

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First-Loss Capital

Why First-Loss?

Some venue deals carry higher risk:

Risk Factor	Examples
New venues	No operating history
Turnaround situations	Underperforming venues
Large advances	>$500K commitments
Market uncertainty	Unproven markets

For these deals, curators may provide first-loss capital—junior capital that absorbs losses before the senior sUSDtix pool.

Capital Stack

┌─────────────────────────────────────────────────────────────────────┐
│                    CAPITAL STACK (per deal)                          │
└─────────────────────────────────────────────────────────────────────┘

┌─────────────────────────────────────────────────────────────────┐
│                    SENIOR (sUSDtix Pool)                          │
│                         70-90%                                   │
│                                                                  │
│    Protected by FiLo first-loss capital                         │
│    Target yield: 10-15% APR                                     │
└─────────────────────────────────────────────────────────────────┘
                              ▲
                              │ Losses flow up
                              │
┌─────────────────────────────────────────────────────────────────┐
│                    JUNIOR (FiLo Curator)                         │
│                         10-30%                                   │
│                                                                  │
│    First to absorb any shortfalls                               │
│    Premium yield: 20-30% APR                                    │
└─────────────────────────────────────────────────────────────────┘

When First-Loss Applies

Not every deal requires FiLo capital:

Deal Type	FiLo Required	Senior-Only
Established venue, proven track record	❌	✅
New venue, experienced operator	✅ 10-15%	85-90%
Turnaround situation	✅ 20-30%	70-80%
Large advance (>$1M)	✅ 15-20%	80-85%

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Deal Economics

Curator Compensation

Curators earn from multiple sources:

Source	Description	Typical
Origination fee	% of advance at closing	1-2%
First-loss yield	Premium return on junior capital	20-30% APR
Monitoring fee	Ongoing management	0.25-0.5% annually
Success bonus	Volume threshold completion	Performance-based

Example Deal

DEAL: Regional Theater Chain
─────────────────────────────────────────────────────────────────

Advance Amount:         $500,000
Volume Threshold:       $8,000,000
Time Limit:            48 months
Integrator Required:   Yes (TIX-enabled platform)

CAPITAL STACK:
─────────────────────────────────────────────────────────────────
Senior (sUSDtix):       $400,000 (80%)
Junior (FiLo):         $100,000 (20%)

PROJECTED RETURNS (assuming $6M volume in 36 months):
─────────────────────────────────────────────────────────────────
Total Fee Revenue:     $1,620,000 (27% × $6M)
Less: Advance Recoup   -$500,000
Net Protocol Revenue:  $1,120,000

Senior Return:         ~$900,000 on $400K = 225% over 36 mo
Junior Return:         ~$220,000 on $100K = 220% over 36 mo
                       (+ origination + monitoring fees)

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Underwriting Framework

Volume-Based Underwriting

Unlike credit-based underwriting (can they pay?), TIX Credit uses volume-based underwriting (how many tickets will they sell?):

Traditional Credit	Volume Underwriting
Credit score	Historical ticket volume
Debt-to-income	Events per month
Payment history	Average ticket price
Collateral value	Market demand indicators

Key Metrics

Metric	Description	Benchmark
Events/Month	Average monthly event count	>8 events
Avg Attendance	Tickets per event	>60% capacity
Avg Ticket Price	Face value	$25-75
Annual GMV	Gross ticket sales	>$2M
Growth Trend	YoY volume change	Positive
Artist Deposit Load	Typical deposits outstanding	Informs advance sizing

Deal Sizing Formula

ADVANCE = (Projected Annual GMV × Fee Revenue %) × Safety Factor

Example:
─────────────────────────────────────────────────────────────────
Projected Annual GMV:    $3,000,000
Fee Revenue (27%):       $810,000/year
4-Year Projection:       $3,240,000 fees
Safety Factor:           25%
Max Advance:             $810,000

Understanding Artist Deposit Needs

The primary use of advances is covering artist deposits—curators should understand the venue's booking cadence:

WORKING CAPITAL ESTIMATION
─────────────────────────────────────────────────────────────────
Shows per month:         20
Average artist fee:      $25,000
Deposit requirement:     50%
Average deposit float:   60 days

Monthly deposit outflow: 20 × $25K × 50% = $250K
Capital tied up:         ~$500K at any time (2 months float)

→ Advance should cover 2-3 months of deposit float

A venue that can't cover artist deposits can't book shows. No shows = no tickets = no fee revenue. This is why matching advance size to working capital needs is critical.

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Risk Assessment

Volume Risk Factors

Factor	Risk Level	Impact on Terms
New venue	High	More FiLo, lower advance
Proven operator	Low	Less FiLo, higher advance
Seasonal market	Medium	Volume threshold adjusted
Urban location	Low	Standard terms
Rural/suburban	Medium	More FiLo capital
Single genre	High	Diversification required

Red Flags

❌ Do not advance if:

• No operating history AND inexperienced operator

• Existing long-term ticketing contracts

• Venue ownership disputes

• Recent bankruptcy or litigation

• Unable to verify historical data

⚠️ Proceed with caution (high FiLo):

• <2 years operating history

• Operator transition in progress

• Market with declining demand

• Heavy competition from new venues

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Compliance Monitoring

Exclusivity Verification

Curators must verify ongoing exclusivity compliance:

Check	Method	Frequency
Ticket links	Review venue marketing	Weekly
Social media	Monitor posts	Continuous
Event listings	Cross-reference with TIX	Per event
Third-party reports	Industry monitoring	Monthly

Breach Response

If exclusivity breach detected:

1. Document — Capture evidence of breach

2. Notify — Formal notice to organizer

3. Cure Period — Opportunity to remedy

4. Escalate — Advance acceleration if not cured

5. Enforce — Legal action if necessary

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Becoming a Curator

Requirements

Requirement	Description
Capital	Ability to provide first-loss (min $100K)
Expertise	Entertainment industry experience
Network	Venue operator relationships
Track Record	Prior deal origination
Governance	Protocol approval process

Onboarding Process

1. Application — Submit curator application

2. Review — Protocol team evaluation

3. Governance — Community approval vote

4. Training — Platform and process onboarding

5. Pilot — First deals with oversight

6. Full Access — Independent deal origination

Curator Tiers

Tier	Deal Size	FiLo Required	Approval
Associate	<$250K	25%+	Committee
Standard	$250K-$750K	15-25%	Expedited
Senior	$750K-$2M	10-20%	Fast-track
Principal	>$2M	Negotiated	Direct

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Portfolio Management

Diversification Guidelines

Dimension	Target	Rationale
Geography	No >25% single market	Regional risk
Venue Size	Mix of large/small	Volume stability
Genre	Multiple genres	Demand diversity
Operator	No >15% single operator	Concentration risk
Advance Size	Laddered maturities	Liquidity management

Rebalancing

Curators should regularly assess:

• Underperforming venues (below projection)

• Overperforming venues (early completion)

• Market changes affecting demand

• Competitive developments

• Renewal opportunities

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