The STACK Note™ Handbook

Structured Terms for Aligned Capital Kicker (STACK) — A Guide for Moonshotnx Founders

1. What Is a STACK Note?

The STACK Note (Structured Terms for Aligned Capital Kicker) is a founder-aligned investment instrument designed to provide follow-on funding after a grant is received. Issued by the regional M1 Funds, the STACK Note gives early-stage startups the capital they need to convert traction into investment without sacrificing control or ownership prematurely.

It is not a loan, not a convertible note, and does not charge interest. Instead, it gives investors the right to receive equity in your next priced round under pre-agreed terms.

2. Why the STACK Note Exists

The STACK Note was created to:

  • Enable founders to access capital quickly after receiving non-dilutive grants

  • Bridge the funding gap between early traction and priced equity rounds

  • Provide investor-aligned terms without legal friction or negotiation overhead

  • Replace outdated SAFE structures with a clearer, scalable capital mechanism

  • Integrate into the broader Moonshotnx Capital Stack system while remaining administratively independent under the M1 Funds

3. How the STACK Note Works

Funding

The STACK Note is deployed as a follow-on investment after the $50,000 Moonbase Grant. It is administered by the regional M1 Fund investment team.

Access is governed by the Capital Council, the investment approval body that oversees allocation decisions. Approval to present to the Capital Council is granted by the Maxnx advisory team, once the startup is assessed as “investor ready”.

This investor readiness assessment includes pitch material quality, data room readiness, founder performance, traction, and strategic clarity.

Conversion

The STACK Note converts into equity at the time of your next priced round (typically Seed or Series A). The exact terms—including valuation cap, discount, and any optional kicker—are negotiated and finalized when the STACK Note is issued.

There is no interest and no maturity date. Conversion occurs only during a qualified financing round or other trigger events.

Trigger Events

  • Automatic conversion at your next equity round

  • Optional conversion at the election of the fund during a secondary sale, acquisition, or liquidity event

  • Optional repurchase or redemption if a qualified round does not occur within a reasonable timeframe

4. Key Terms to Know

Valuation Cap

The maximum valuation at which the STACK Note converts. Protects early capital providers.

Discount

Optional. Allows investors to convert at a reduced price relative to new investors.

No Interest

This is not debt. No interest accrues.

No Maturity

There’s no deadline to convert unless a trigger event occurs.

Kicker

Optional incentive tied to performance. May include equity bonus or rev share, depending on region.

 

5. Benefits for Founders

  • Maintain full ownership during early growth

  • Avoid early dilution or rushed equity rounds

  • Get pre-seeded by institutional capital before venture rounds

  • Streamlined agreement, minimal legal overhead

  • Designed to work alongside grants, IR support, and investor outreach

6. STACK Note Lifecycle

1.      Receive $50,000 Moonbase Grant

2.      Complete onboarding and Maxnx advisory support

3.      Become “investor ready” as assessed by Maxnx

4.      Approved by Capital Council for STACK Note

5.      STACK Note issued by M1 Fund

6.      Maxnx continues support to raise remaining round

7.      Raise priced round (Seed or Series A)

8.      STACK Note converts into equity

7. What Happens After the STACK Note Is Received

After you receive the STACK Note funding:

  • You are formally onboarded as a portfolio company of the issuing regional M1 Fund

  • You continue to work with Maxnx to raise additional capital and close the rest of your round

  • You receive access to investor introductions, platform support, and fundraising logistics

  • You remain on the capital stack pathway for potential follow-on investment

8. Legal Documentation

When you’re approved for a STACK Note, you will receive:

  • A STACK Note Agreement from the issuing M1 Fund, for founder consideration and acceptance

  • A clear founder explainer describing your obligations and conversion mechanics

  • Any required support to update your cap table or entity structure

All documents are standardized for clarity and speed, but founders are encouraged to have legal counsel review them independently if desired.

10. Final Notes

The STACK Note is a critical component of your capital journey. It provides the right capital at the right time—without unnecessary dilution, pressure, or complexity. It was built to give founders leverage, not extract it.

It exists to help you grow, raise with confidence, and close with power. Maxnx and the M1 Fund teams are here to support every stage of that journey.