Webinar: Revenue Based Financing

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015

Revenue-Based Financing

Long term capital that’s good for growing

tech companies


› Mission: make fundraising

process more efficient utilizing

technology and alternative

structures

› Funded +60 tech companies:

Most active revenue-based

finance lender in the country

› $50K-$1M in growth capital

› Entrepreneur-aligned structure

About Lighter Capital


Lighter Capital: Director since 2014

Investment Banking: Senior Partner at GT

Securities; Focus on emerging technology companies

capital raising and M&A; raised +$50m in combined

equity/debt transactions

Startup: Business Development, Finance + Client

Management roles at various venture and angel-

backed digital media, mobile and music technology

companies

Other: Angel investor in various music technology

companies

MBA - University of Washington

BA – University of Texas

p3

+10 years financing early

stage tech companies, either

as an entrepreneur or investor.

Over $50M raised or invested

Presenter: R. Branden Harper


Today’s Agenda

What is RBF & how it works

How to figure out if its right for your

business

Q&A

p4


› No dilution – Keep ownership of your company

› No financial covenants – Payments depend only on

company performance

› No loss of control – No board seat, no ability to replace

management

› No personal guarantees – Secured only against company

assets

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Revenue-based Financing. The Best of

Equity and Debt

1 2 3 4 5 6 7 8 9 10 11 12 13 14Period

› Aligned interest – Our IRR depends

on your performance

› Advice – Here to help

Company revenue

Loan payment

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p6

Up to $1M or 33% of annualized revenue run rate

› No set interest rate; depends on company performance

› Matures in 5 years or when cumulative payments equal a set

amount, usually 1.7 – 2.5x principal

› Monthly payments are a fixed percent of revenue; .75-8% range

› Small cash upside participation

Example Loan

› Annual Revenues: $1.5M

› Principal: $400K

› Maturity: 5 years

› Payment: 5% of monthly revenue

› Repayment: 1.75x principal; $700K

› Upside Participation: $100K at liquidity event Cu

mu

lative

Pa

ym

en

ts

Prin

cip

al

Loan Maturity

1.7x

to

2.5xPrincipal

Lighter Capital’s RevenueLoanTM


Early Growth Stage Technology Companies

Financials:

› Revenue Min: $15k+ / month

› Gross Margin: High (50%+)

› Profitability: Not required, but

clear path to profitability from our funds

› Other Debt: Not too high (unless

convertible debt)

› Customer Base: No major concentration

› Recurring Revenue or Repeat Customers

Management:

› High ownership, full time dedication

Geography:

› HQ in US or Canada

Use of Funds:

› Growth: Sales, Marketing, Product

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Software, SaaS, Digital Media, Tech Services and similar

Investment Criteria

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p8

Company

snapshotCreate a high level

company overview online

in 10 minutes.

Getting

the detailsWe will send you a link

to upload and provide financial

statements, customer and

team information followed by

one or two calls with our

underwriting team.

Closing

the dealWe issue a Term Sheet

for review. Once agreed,

you are funded

STEP 1 STEP 2 STEP 3

The Funding Process


Bank / DebtRevenue-Based

Finance

Venture

Capital

Guarantees &

Controls

Financial Covenants

Sometimes Personal

Guarantees

No Financial Covenants

No 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 weeks

Highly variable. Typical

3-6 months focused

effort

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Funding Option Comparison


Client Case Study

Growth without dilution

10

› Who: A SaaS company providing

mapping and geo-analytics for Salesforce

users.

› Funding: Initial Funding 2012. 4 rounds

totaling $1M. Only outside money raised.

› Use of Funds: Product development,

marketing and expanding the sales team.

Today

› #227 on 2014 Inc. 500 fastest growing

private companies in USA for.

› #15 in the software industry

› Grew 1,995% between 2010-2013

› The entrepreneur still owns the majority 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


Client Case Study

Grow to a Better Valuation

11

› 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

› Subsequently raised $11M equity round

› Increased revenues by 500%

› Grown 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


Client Case Study

Flexibility & Introductions

12

› Who: A SaaS company on the Salesforce

platform. Provider of core banking

software for microfinance institutes,

cooperative banks, and credit unions.

› Funding: $150,000 in 2012

› Use of Funds: Key growth hire to

double customer base in 6 months.

Today

› Raised $1 million with VC’s including

EpicVentures, who were introduced by

Lighter Capital

Securing a Lighter Capital loan was

definitely a lot less draining than raising

venture capital.

We also really like the structure of the

loan, because it helps us control costs.

A revenue-based model is tied to how

much money you make every month. If

we have a couple of months where our

numbers are

down, we don’t need to write a big fat

check like you would with a bank loan

with fixed payments. That provides a

sense of comfort.

Snehal Fulzele, CEO Cloud Lending


Want to Learn More?

Visit Our Website

www.lightercapital.com

Apply Online

www.lightercapital.com/apply

See If You Qualify

www.lightercapital.com/how-it-works/see-if-you-qualify

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Webinar: Revenue Based Financing

Small Business & Entrepreneurship

Transcript of Webinar: Revenue Based Financing