how to fund your growth for 2015 ? discover revenue-based financing

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014

Revenue-Based Financing

Get funded for 2015

December 11, 2014


› Lends $50K-$1M in growth capital

› Entrepreneur-friendly structure we call a RevenueLoan (revenue-based finance)

› Goal: make funding fast and easy. Tech-enabled analysis, diligence, underwriting and servicing.

› Completed >60 deals: Most active revenue-based finance lender in the country

About Lighter Capital


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 LacklandCEO,

Lighter Capital

15 years financing early stage tech companies,

either as an entrepreneur or investor.

Over $50M raised or invested


Today’s Agenda

The funding landscape

Choosing your funding path

Revenue-based financing – how it works

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Falling cost of innovation

Shifting VC landscape

More fundingsources

• More startups• More capital

• Growth of Seed Rounds

• Series A the New B

• Rise of corporate VC• Debt• Crowdfunding/

Angellist

Big Themes Affecting the Funding Landscape


What Will You Be When You Grow Up?

› Different ‘financing roadmaps’ available, depending on the business

› Know your business

› Know your goals

› Choose wisely

› Choose a financing path that’s available. Dead ends waste time

› Financing decisions are hard to reverse

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Know Your Business

Stage & Capital› What is the current company stage? What is the next stage?› How much capital do you need to get to the next stage?› Existing investors needs?

Sales & Marketing› Nailed the target customer? › How big is your target market? Larger than $1B? › Ready for scale?

› Product-Market fit? Nailed customer acquisition cost, LTV, churn?› Nailed revenue / pricing model? › What does your sales pipeline look like? How long is sales cycle?

Team› Is your team capable of going to the next stage?

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› Long term – Do you want to exit? When? Never?

› Control – Who do you want as partners? Who controls big decisions? How is shared control structured?

› Equity – What are you willing to give up?

› Timeframe – How long will raising funds take? Distraction?

› Risk – What are you willing to risk? Will own money? Personal assets?

› Flexibility – How do you want to repay the money?

› Mentoring – Do you want lots or little guidance?

› Aligned interest – Can you align investors’ goals with yours?

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Know Your Goals


VC backed path

Non VC path

Seed/Series A VC

Traditional Banks

Revenue$5m


Series B VC

Corporate Venture

Established

Ideation

Launch & Traction

Growth & Scale

Breakout

Bootstrap/Family & Friends

Angels /Incubators/Crowdfun

ding

Bootstrap/Family & Friends

Angels /Incubators/Crowdfun

ding

Tech Banks

Series C VC

Debt

Equity

Tech Banks

Choosing the right funding path


What is it and how it works



How a RevenueLoan Works

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Up to $1M or up to 33% of annualized revenue run rate› No set interest rate, payment, or maturity › Monthly payments are a fixed percent of revenue› Matures in 5 years or when cumulative payments equal a set

amount, usually 1.5 – 2.5x principal› Small upside participation

Example Loan

› Annual Revenues: $1M

› Principal: $200K

› Maturity: 5 years

› Payment: 5% of monthly revenue

› Repayment: 1.75x principal ($350K)

› Upside Participation: $50K at liquidity event

Cum

ula

tive

Pa

ymen

ts

Prin

cip

al

Loan Maturity

1.5xto

2.5xPrincipal


Bank / DebtRevenue-Based

FinanceVenture Capital

Guarantees &Controls

Financial CovenantsSometimes Personal

Guarantees

No Financial CovenantsNo Personal Guarantees

Partner in the Business (Board Seat, voting

shareholder)

Added Value Low / None Medium High

Dilution None / LowLow: Small Upside

Participation High

Payment Flexibility

Low: Fixed Payments

Medium: Variable Payments

High: No Payments

Speed 4-8 months 4 weeksHighly variable. Typical

3-6 months focused effort

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The Best of Equity and Debt


Early growth stage technology companies

Lighter Capital’s Investment Criteria

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


Fast Process- Get Funded in a Month!

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Result: We fund 27% of companies that meet our criteria

Company snapshot

Create a high level company overview online

in 10 minutes.

Getting the details

We 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 deal

We issue a Term Sheet for review. Once agreed,

you are funded

STEP 1 STEP 2 STEP 3

LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 16

Client Case Study- Cloudbilt and Valant

› A SaaS company on the Salesforce platform

› Bootstrap- the only outside money raised

› 4 rounds of funding, totaling $1M

› Recently named #227 on Inc. 500 fastest growing private companies, and #15 in the software industry

› Grew 1,995% between 2010-2013

› A SaaS solution for mental health professionals

› Used $250K for product development, sales & marketing

› Recently raised a $11M equity round

› Monthly revenue grew >10X


Want to Learn More?

Visit Our Websitewww.lightercapital.com

Apply Onlinewww.lightercapital.com/apply

See If You Qualifywww.lightercapital.com/how-it-works/see-if-you-qualify

http://www.lightercapital.com/?cmpid=701i00000007uio&mch=Social&mchd=SlideShare

https://secure.lightercapital.com/M1/Apply.aspx?cmpid=701i00000007uio&mch=Social&mchd=SlideShare

http://www.lightercapital.com/how-it-works/see-if-you-qualify/?cmpid=701i00000007uio&mch=Social&mchd=SlideShare

how to fund your growth for 2015 ? discover revenue-based financing

Small Business & Entrepreneurship

businessstage capital

venture capital fund

inequity financing

financing path thatsavailable

tech startups

investors goals

funding fast andeasy

current company stage