Post on 18-Aug-2015
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
Funding Options
For Growing SaaS Companies
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
About BJ Lackland
Lighter Capital: CEO since 2012
Power Efficiency Corporation: CFO & DirectorPublic energy technology company, raised $20M in equity financing, $5M in various debt financings
Summit Energy Ventures: VP & Director (Partner)$25M venture capital fund focused on Series A & B rounds, PIPEs, convertible debt
Other: Active angel investor and consultant to early stage companies. Senior finance and marketing leader at tech startups, EnCompass Globalization and webStrategic.
MBA and MA in International Studies from University of Washington
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BJ Lackland, CEO Lighter Capital
15+ years financing early stage tech
companies, either as an entrepreneur or investor.
Over $50M raised or invested
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About Lighter Capital
52%
25%
21%
2%
SaaS
SaaS + Service
Tech-enabled services
Digital Media
› 100+ financings across 70+ companies
› Almost 80% are SaaS
› Revenue Based Financing for tech companies
› $50k-$1mm per company
› Technology + Capital = Better for Entrepreneurs
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
› The best of debt and equity – aligned interests with no dilution
› Essentially a royalty agreement
› Monthly payments = fixed % of revenue
› Fits SaaS
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What’s Revenue Based Financing?
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Company revenueLoan payment
Example Financing
› $500K funding
› Payment: 5% of monthly revenue
› Repayment: 1.7x principal ($850K)
› Maturity: 5 years
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
Today’s Agenda
Trends + Paths + Tradeoffs
Finding your funding path
Q&A
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LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
Cost of Entry
Speed of Innovation
More Startups
Angels/VC
Larger Funds
Series A is The New B
Other Sources
Corporate Venture
Debt + Crowd funding
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The Funding Landscape
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
Revenue$5m
Established
Ideation
Launch & Traction
Growth & Scale
BreakoutDebt
Equity
Bootstrap / Friends & Family
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Funding Paths for Technology Startups
Incubator / Angels
1. VC Backed
2. Non VC
3. Blended
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Non VC Funding Path: Growth without dilution
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› Who: A SaaS company providing mapping and geo-analytics for Salesforce users.
› Funding: RevenueLoan from Lighter Capital in 2012. Total of 5 financings for $1M. The only outside money raised.
› Use of Funds: Product development, marketing and expanding the sales team.
Today
› Millions in revenue
› #227 on 2014 Inc. 500 fastest growing private companies in the U.S.
› #15 among software companies
› Grew 1,995% between 2010-2013
› Founders still own 80%+ of the company
Because of our close working relationship with the investment team, and how well they understand Salesforce’s AppExchange Partners, the initial funding and follow-on rounds have allowed us to bring in the capital we need very efficiently.
It’s great to be able to focus on growing my business rather than on looking for funding.
John Stewart, CEO Cloudbilt
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
Blended Funding Path: Grow to a Better Valuation
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› Who: SaaS solution for mental health professionals
› Funding: Initial Funding 2010 - $250,000
› Use of Funds: Increase engineering capability, attain product certification, sales and marketing
Today
› Millions in revenue
› Subsequently raised two rounds of equity financing totaling: $14M (Lighter Capital introduction)
› Increased revenues by >500%
› Grew from 10 to 60+ employees
“We had a responsible mix between equity financing and revenue-based financing. I’m glad we didn’t dilute more than we did.”
David Lischner, CEO Valant
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
Bank / DebtRevenue-Based
FinanceVenture Capital
Guarantees &Controls
Financial CovenantsSometimes Personal
Guarantees
No Financial CovenantsNo Personal Guarantees
Partner in the Business (Board Seat, Voting
Rights)
Added Value Low / None Medium High
Dilution None / Low None High
Payment Flexibility
Low: Fixed Payments
Medium: Variable Payments
High: No Payments
Speed 4-8 months 4 weeksHighly variable. Typical 3-9 months of focused
effort
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Funding Option Comparison
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
1. Equity Valuation? What % to give up for the
capital?
2. Control/Partnership Who makes key
decisions?
3. Value-add More than just money? Accelerate
value?
4. Risk Tolerance Personal assets?
5. Timeframe/Distractions How long will raising
funds take?
6. Horizon Exit strategy? Build to exit? Build and
hold?
7. Culture Is there alignment?
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Selecting a Funding Path
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Know Your Numbers› Actual historical › Projections & assumptions› Key SaaS metrics› Capitalization
Document Your Company
› Executive summary› Investor deck › Supporting slides / deep info› Product demo
Get Ready for Funding – the Checklist
Take Action› Activate your network › Legal + accounting prep› Keep momentum / sense of
urgency
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Financials› MRR (Monthly Recurring
Revenue)› Burn rate› Zero cash date
Customer Metrics › Acquisition costs: CAC, CAC
Ratio, CAC Payback › Customer value: ACV, LTV› Churn
Key SaaS Metrics to Focus on
Growth › Monthly and annual revenue
growth rates› MRR/ARR growth rate
› 40% rule: is your growth outpacing your burn?
Market/White Space › Market size / disruption› Competitors
LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015
Q&A
Want to Learn More about Lighter Capital?Visit Our Website
www.lightercapital.comApply Online
www.lightercapital.com/applySee If You Qualify
www.lightercapital.com/how-it-works/see-if-you-qualify