> For the complete documentation index, see [llms.txt](https://docs.ledgity.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ledgity.finance/rwa-portfolio/sarr-fund-overview.md).

# SARR Fund overview

The **SARR Fund (Stable and Recurring Revenue Fund)** is a Luxembourg-based investment vehicle focused on financing European companies with **predictable subscription-based revenues**. Instead of providing traditional loans or taking equity, SARR purchases **future recurring revenue streams** over short durations (typically **6–12 months**) at a discount.

This model allows Ledgity to generate **stable, repeatable, non-cyclical yield** — independent from token incentives or speculative market cycles.

#### **Why SARR Fits Ledgity’s Yield Model**

| Attribute                           | Benefit for Yield Stability                                          |
| ----------------------------------- | -------------------------------------------------------------------- |
| **Short Duration (6–12 months)**    | Predictable cash flow cycles, supports flexible withdrawal liquidity |
| **Recurring subscription revenues** | Revenue streams with historically high payment reliability           |
| **Super senior claim structure**    | Repaid **before** banks, equity holders, and even the company itself |
| **Real-time transparency**          | Underwriting based on **bank, accounting, and subscriber data**      |
| **No equity, no traditional debt**  | Cash flow purchase model reduces default + refinancing risk          |

> In simple terms:\
> **SARR finances companies the moment revenue is earned, not based on hoped-for future growth.**\
> Which means yield comes from **real activity**, not projection or speculation.

***

### **How the Yield Is Generated**

1. SARR identifies European businesses with **stable subscription revenue**.
2. It **purchases 6–12 months of future subscriber payments** at a discount.
3. Subscribers continue paying monthly → payments are **automatically collected**.
4. The difference between **purchase price and collected revenue** = **yield**.

→ This is **not** lending.\
→ This is **not** revenue-based financing dependent on future growth.\
→ This is **cash-flow acquisition** on **existing, proven, stable revenue**.

***

### **Risk Mitigation Framework**

SARR reduces risk structurally (not just statistically).

| Risk Reduction Mechanism             | Description                                                             |
| ------------------------------------ | ----------------------------------------------------------------------- |
| **Full data transparency**           | Real-time access to **bank data, accounting, and subscriber analytics** |
| **Collateral selection (LTV ≤ 30%)** | Only the highest-quality subscriber cohorts are used as collateral      |
| **Super-senior repayment**           | SARR is paid **before** banks, creditors, and the company               |
| **Automatic repayment sweeps**       | Monthly revenue is **requisitioned before reaching the company**        |
| **Diversified portfolio**            | Exposure is spread across **many companies and sectors**                |

This model has been deployed across **1,000+ financings**, representing **€500M+ of revenue secured** to date **with no recorded capital loss events**.\
(Source: SARR Fund Performance Summary) **▶SARR – Stable And Recurring Re…**

***

### **Why SARR Is Not “RBF”, Not Private Credit, and Not Factoring**

| Model                             | Risk Driver                               | SARR Difference                                        |
| --------------------------------- | ----------------------------------------- | ------------------------------------------------------ |
| **Revenue-Based Financing (RBF)** | Performance depends on growth             | SARR purchases stable *existing* revenue streams       |
| **Private Credit**                | Exposure to company solvency and leverage | SARR receives cash **before** debt holders or banks    |
| **Factoring**                     | Counterparty relies on invoice payers     | SARR selects **best-paying subscribers**, not invoices |

→ **SARR is effectively a new asset class** made possible by:

* Open Banking (real-time bank + accounting data)
* Subscription business models (predictable revenue dynamics)

***

### **Role of SARR in Ledgity Yield**

| Ledgity Allocation Component        | Function                             |
| ----------------------------------- | ------------------------------------ |
| **SARR Fund (\~80%)**               | Core stable real yield source        |
| **DeFi secured strategies (\~15%)** | On-chain flexibility + composability |
| **Liquidity Buffer (\~5%)**         | Fast withdrawals and safety margin   |

This allows Ledgity to deliver:

* **Stable target yield (\~9% APY)**
* **Predictable liquidity cycles**
* **Risk-controlled exposure**
* **Full transparency (on-chain + off-chain reporting)**

***

### **In Summary**

SARR enables Ledgity to deliver **real yield** that is:

* **Uncorrelated** to crypto market cycles
* **Independent** of inflationary token incentives
* **Anchored** in recurring business revenues
* **Backed** by institutional-grade underwriting and transparency


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