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Chicago, IL – December 14, 2022 – SG Stonegate Capital, a division of SG Credit Partners (“SGCP”), a family-office backed lender providing capital to lower middle market businesses and entrepreneurs, is pleased to announce the closing of a senior debt investment in Brazi Bites, a leading U.S. brand of Latin-inspired foods.

Brazi Bites began with an authentic family recipe for a Brazilian household staple and a passion to share the joyful moments that accompany delicious high-quality food. A pioneer of Latin-inspired better-for-you foods, the brand first produced their award-winning Brazilian cheese bread and has since expanded their product line to include a variety of empanadas, pizza bites, and breakfast sandwiches, all of which are clean label and naturally gluten-free. With a foundation of simple, wholesome ingredients, Brazi’s easy-to-make products enable consumers to enjoy more time with the people they love.

“Brazi Bites has created an exciting offering of unique, delicious products. Their approach to building an authentic brand that is 100% focused on the consumer is an ideal fit for our investment thesis,” said Charlie Perer, Co-Founder and Head of Originations at SG Credit Partners. “We look forward to supporting their growth trajectory for years to come.”

“Partnering with SG Stonegate is a key step in the next phase of Brazi Bites as we continue to expand both the reach of our distribution as well as launch new product lines. They are a perfect fit for our growth story that is still unfolding.” said Mike Guanella, Brazi Bites CEO.

SG Stonegate has significant experience investing in the emerging food and beverage space. Current and past investments include Brazi Bites, Clio Snacks, Tata Harper, Purely Elizabeth, Simple Mills, Smith Teamaker, Van Leeuwen Ice Cream, and Zevia.

About Brazi Bites

Brazi Bites is a leading U.S. brand of Latin-inspired, naturally gluten-free and better-for-you foods. Based in Portland, OR, Brazi Bites products can be found at more than 16,000 natural and conventional stores nationwide, including Whole Foods, Target, Costco, Wegmans, Publix, Kroger, Albertsons, and more, as well as online at www.brazibites.com and Amazon. For more information and to browse Brazi Bites products, please visit www.brazibites.com.

About SG Stonegate Capital / SG Credit Partners

SG Stonegate Capital, a division of SG Credit Partners (“SGCP”), is a family-office backed lender providing capital to lower middle market businesses and entrepreneurs requiring tailored credit solutions. SG Stonegate and SGCP provide structured credit solutions ranging from $2 Million – $20 Million primarily via three credit verticals: Software & Technology, Consumer Products, and Lower Middle Market. The firm has collectively deployed over $500MM+ of capital to lower middle market businesses across a variety of industries. For more information, please visit www.sgcreditpartners.com.

Chicago, IL – November 1, 2022 – SG Stonegate Capital, a division of SG Credit Partners (“SGCP”), a family-office backed lender providing capital to lower middle market businesses and entrepreneurs, is pleased to announce the closing of a senior debt investment in Smith Teamaker, a leading U.S. brand of specialty and artisan tea products.

After successfully founding and exiting two previous tea brands, the late iconic entrepreneur Steven Smith set out to deliver the finest small-batch tea in the market, and thus his namesake was founded in 2009 in his hometown of Portland, OR. The business has since become a nationally recognized brand known for sourcing the highest-quality ingredients from sustainable farms all over the world. With a mission to enrich lives through exceptional tea experiences, the Company strives to make a positive impact by actively supporting sustainable and progressive initiatives especially in low-income regions where growers are often based.

“Smith Teamaker has really set the standard for high-quality tea and has consistently shown that their craftsmanship and creativity can produce an uncompromising product,” said Dan McCallum, Director at SG Stonegate Capital. “Their relentless pursuit of the perfect cup of tea is an ideal fit for our investment philosophy to support preeminent growing consumer brands.”

“We greatly appreciate how quickly SG Stonegate understood our business and working capital financing needs” said John Wells, CFO of Smith Teamaker.  “They provided a structure that helps fund our rapid growth while providing us with needed flexibility.  From the moment we met the SG Stonegate team, we have found them to be responsive and supportive business partners.”

SG Stonegate has significant experience investing in the emerging food and beverage space. Current and past investments include Clio Snacks, Country Archer Provisions, Purely Elizabeth, Simple Mills, Smith Teamaker, Van Leeuwen Ice Cream, and Zevia.

About Smith Teamaker

Smith Teamaker is a leading U.S. brand of specialty and artisan tea products. Based in Portland, OR, Smith Teamaker’s products can be found at www.Smithtea.com, Smith Tasting Rooms or in quality hotels, restaurants, and stores nationwide. Smith Teamaker is a mission-driven organization on a quest to enrich lives through exceptional tea experiences. For more information and to browse Smith Teamaker’s products, please visit www.smithtea.com.

About SG Stonegate Capital / SG Credit Partners

SG Stonegate Capital, a division of SG Credit Partners (“SGCP”), is a family-office backed lender providing capital to lower middle market businesses and entrepreneurs requiring tailored credit solutions. SG Stonegate and SGCP provide structured credit solutions ranging from $2 Million – $20 Million primarily via three credit verticals: Software & Technology, Consumer Products, and Lower Middle Market. The firm has collectively deployed over $500MM+ of capital to lower middle market businesses across a variety of industries. For more information, please visit www.sgcreditpartners.com.

SG Credit Profile: Software & Technology

The Company: Extended Care Professional (“ECP”) is a SaaS-based company that provides a suite of integrated EHR, eMAR, and other software tools to assisted living facilities and the pharmacies that serve them. ECP’s product suite automates med-passing workflows leading to better patient outcomes and enhanced oversight.

The Financing Situation: ECP was seeking additional capital to bolster its sales and R&D teams to further support growth. The Company also wanted to partner with a debt provider that could facilitate additional tranches for add-on / tuck- in acquisitions as opportunities arise.

The Solution: SG provided a non-dilutive growth facility structured around ARR and enterprise value. The credit facility included additional tranches available upon achieving agreed upon KPIs.

Edge of Tomorrow is a 2014 science fiction thriller starring Tom Cruise. The movie is about a soldier who is caught in a time loop repeating the same day while trying to save the world from an alien invasion. Tom Cruise becomes an expert soldier over the course of many time loops and in Hollywood fashion defeats the aliens and crosses the edge to tomorrow. Transfix this to the lending world and we are at the proverbial edge of tomorrow. Lenders have been on a time loop for several years now waiting for a market correction. The “lending time loop” has been COVID, which brought PPP (plus all the other government programs) and low rates, which in turn stimulated demand and the stock market. Everyone thought COVID was the edge only to be delayed by PPP, but now the liquidity created is being rapidly sucked out of the system and inflation is running rampant. Absent another government intervention we are now at the edge of tomorrow, and while we are not being attacked by aliens, we are dealing with a number of unseen events or at least not seen since the 1970s. Right now, all we see is the edge.

This is what the edge looks like – COVID was not free, and the bill is now coming due. The Federal Reserve is now aggressively increasing rates and moving to shrink the stockpile of $9 trillion of government bonds. On main street, most people are going to back to work and majority of trends that happened during COVID are reversing such as work from home, Peloton, online shopping, Zoom and others. are all decreasing. Most retailers are now facing an inventory glut. FedEx recently issued a notice of falling global demand and prices are up across the board. The facts are as follows: Demand has now slowed, consumer prices have increased, home prices have decreased and the Federal Reserve has kept its word. The list goes on for every economic and personal consumption trend that is being reversed with the liquidity being taken out of the system. There are outliers, but banks’ portfolios are generally balanced across most major industries, so they are now finally starting to prepare for tomorrow. A global slowdown in publicly announced deals also seems to support this.

According to Refinitiv, 2022 global M&A volume was $642 billion between July and September, a 42 percent drop from the prior quarter and the lowest Q3 figure in a decade. This implies the slowest overall quarter since pandemic ravaged Q2 2020. U.S. deals were down by a similar percentage, to $278 billion and the number of global deals was at its lowest mark since Q1 2015. That’s notable because it illustrates how the volume declines weren’t just tied to falling valuations. Several factors contributed to the Q3 deal slowdown including stock market declines – which sidelined many sellers and buyers – and the aforementioned factors such as rising rates, inflation and geopolitical risks among other things. This is what the edge looks like with valuations down, M&A down, liquidity down and key economic indicators causing market turmoil. It’s not guaranteed we will enter a significant recession, but it brings the question of what may be next.

What is tomorrow? Tomorrow, seen through the eyes of ABLs and the surrounding ecosystem of turnaround advisors/professionals, is seeing a transfer of assets from banks to ABLs and other non-bank lenders. Many of these firms have been in a time loop the past few years thinking every quarter would be the one where banks start either taking precautions or start getting in front of the confluence of economic factors affecting most borrowers today. Q3 is now over, and it is going to be quite telling for both the senior management teams at the large banks and the entire non-bank world meant to partner with them. Commercial bank portfolios, which have been clean as a whistle for years, now face real challenges. Banks took reserves, reversed the reserves, and are now re-implementing the reserves. Commercial banks are now actively monitoring all criticized risk-rated credits and are more proactively communicating their concerns to clients in order for them to start seeking non-bank alternatives.

Ironically, the multi-year time loop has shaped the non-bank world to be ready for tomorrow – at least those that stayed disciplined on credit underwriting. COVID helped to accelerate consolidation and scale in the non-bank world. We are now in the world where BDCs are the driving force in non-bank asset-based lending and driving down the cost through capital efficiencies. The bigger firms have been preparing for several years for what should be a seminal event once we go over the edge. That said, lending is a hard business and many lenders have made credit “concessions” to attract borrowers whether it is bank or non-bank. We will see if those lenders can pull in the reins in time. Time will tell if we are now finally at the edge, but the real questions is whether your firm is ready for tomorrow.

Link to original article here.

SG Credit + Stonegate Blue
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Stonegate Capital, a division of SG Credit Partners, serves as a lending partner to emerging brands and innovative consumer-oriented businesses with B2B or DTC channels seeking tailored solutions to fund growth, minimize dilution and generate equity value.

For additional details regarding Stonegate Capital’s investments, please contact us directly at:

Charlie Perer: 310-562-2020 | charlie@sgcreditpartners.com

Spencer Brown:  949-375-3678 | spencer@sgcreditpartners.com

Evan Waggoner:  336-512-6388 | ewaggoner@sghcap.com

Jordan Hoppe: 312-971-8136 | jhoppe@sghcap.com

Dan McCallum: 312-971-9445 | dmccallum@sghcap.com

Ryan Woody: 312-971-1551 | rwoody@sghcap.com

SG Credit Profile: Software & Technology

The Company: X1 is a market leader in remote preservation and ESI collection software. The Company’s products are utilized by F500 companies, law firms, and government agencies for legal, compliance, and governance purposes.

The Financing Situation: X1 required growth capital to continue new product development and to bolster its enterprise sales team.

The Solution: SG was supportive of the transaction given the Company’s ARR growth, strong enterprise customer retention, and continued investor support. SG structured a $2.5MM non-dilutive credit facility around the Company’s ARR, allowing existing investors to capture upside in enterprise value generated by additional growth. SG moved quickly to close the transaction within three (3) weeks.

Chicago, IL – June 7, 2022 – Stonegate Capital, a division of SG Credit Partners (“SGCP”), a family-office backed lender providing capital to lower middle market businesses and entrepreneurs, is pleased to announce the closing of a senior debt investment in Van Leeuwen Ice Cream, a leading brand of premium ice cream products in the U.S.

Founded in 2008 by brothers Ben and Pete Van Leeuwen and Laura O’Neil, Van Leeuwen began as a single ice cream truck and quickly grew into a nationally recognized brand known for its made-from-scratch dairy and vegan ice creams which are available online, in stores, and at 30+ scoop shops across the country. The company sources high quality ingredients and uses simple recipes to create the best ice cream for all.

“Innovation has been at the center of the company’s success having first ascended as a leader in ice cream, to the development of unique and wildly popular flavors, to the most recent launch of their ice cream bars,” said Dan McCallum, Director at Stonegate Capital. “Van Leeuwen’s approach to making the best products with the best ingredients was an ideal fit for our investment philosophy to support mission-driven market-leaders.”

“Stonegate Capital has been a valued partner since we started our relationship in early 2022.  They consistently show a deep understanding of the complexities and flexibility needed to assist a high-growth and innovative company in the ice cream space.  They have become an invaluable member of our extended team as we balance both our scoop shop and wholesale channels growth,” said Ben Van Leeuwen, CEO and Co-Founder of Van Leeuwen Ice Cream. 

Stonegate has significant experience investing in the emerging food and beverage space. Current and past investments include Clio Snacks, Country Archer Provisions, Purely Elizabeth, Simple Mills, Van Leeuwen, and Zevia.

About Van Leeuwen

Van Leeuwen is a leading brand of premium ice cream products in the U.S. Based in Brooklyn, NY, Van Leeuwen’s products can be found online, in stores, and at 30+ scoop shops across the country. Van Leeuwen is a mission-driven organization on a quest to make good ice cream from good ingredients that makes you feel good. For more information and to browse Van Leeuwen’s products, please visit www.vanleeuwenicecream.com.

About Stonegate Capital / SG Credit Partners

Stonegate Capital, a division of SG Credit Partners (“SGCP”), is a family-office backed lender providing capital to lower middle market businesses and entrepreneurs requiring tailored credit solutions. Stonegate and SGCP provide structured credit solutions ranging from $2 Million – $20 Million primarily via three credit verticals: Software & Technology, Consumer Products, and Lower Middle Market. The firm has collectively deployed over $500MM+ of capital to lower middle market businesses across a variety of industries. For more information, please visit www.sgcreditpartners.com.

In November 2021, SG Credit Partners acquired Stonegate Capital and announced its entry into asset-based lending with a focus on high-growth consumer products. The result of our combined companies is the ability to deliver a complete range of tailored credit solutions to the lower middle-market.

Our unique platform now provides structured credit facilities, ranging from $2MM – $20MM, to businesses across the country primarily via three verticals:

Software & Technology

SaaS, tech-enabled services, and recurring revenue companies seeking non-dilutive capital

• $3MM – $15MM+ ARR
• Strong gross margins & retention
• Path to profitability or sufficient liquidity

Consumer Products

Innovative, emerging brands and consumer-oriented businesses with B2B and/or D2C channels

• $10MM+ revenue
• Demonstrated brand value
• Path to profitability or sufficient liquidity

Lower Middle Market

Structured credit solutions to lower middle-market companies ($10MM – $100MM revenue) and entrepreneurs across a wide variety of industries. We can underwrite based on:

• Cash-flow
• Collateral
• Strong / secured HNW guaranty
• Hybrid combination of the above

We can structure facilities with revolvers (including stretch components), senior term loans (including delayed draws), second / split lien term loans, or unitranche loans, and we are not limited by use of proceeds.

For our valued partners who have known us for many years, we’ve continued to evolve and want to clearly communicate our enhanced capabilities. For those of you who we have met more recently, we look forward to providing flexible and creative credit solutions to you and your clients.

We continue to maintain our national footprint with regional offices in Los Angeles, Newport Beach, Denver, Chicago, Atlanta, and Washington, D.C.

Click here for a link to our one pager.

SG Credit Profile: SaaS

The Company: A leader in cloud adoption and management solutions. 

The Financing Situation: The Company was seeking non-dilutive growth capital to execute on its substantial pipeline. 

The Solution: SG was supportive of the deal due to the Company’s recurring revenue metrics, high retention rates, positive growth tailwinds, and strength of the management team. 

To learn more, please click here to view the full press release. 

SG Credit Partners recently announced its acquisition of Stonegate Capital Holdings (“Stonegate”) and its entry into asset-based lending with a focus on high-growth consumer and recurring revenue verticals.

The acquisition of Stonegate establishes SG Credit Partners as a leading lower middle-market credit platform delivering a complete range of credit solutions and provides a market leading position in the consumer vertical, and revolving capabilities throughout the SG Credit platform. The acquisition also strengthens SG Credit’s product platform which includes the ability to structure senior and junior debt as well as provide both cash flow and asset-based loans.

Marc Cole, Co-Founder and Chief Executive Officer of SG Credit Partners met with Michael Toglia, Publisher of ABL Advisor to discuss this strategic acquisition and how it uniquely positions SG Credit Partners to expand their platform to offer specialized solutions in the middle market.

ABL Advisor: The recent announcement signals SG Credit’s entry into the ABL space. To begin, why is SG entering the ABL space?

Photo of Marc Cole - Co-Founder and Chief Executive Officer - SG Credit Partners, Inc.

Marc Cole: Great question Mike and one that I have been asked a lot recently. We are entering what we call the specialized ABL space for two reasons. Firstly, this acquisition and resulting revolver capabilities strengthen our platform. We raised institutional capital a few years ago with the sole purpose of building a broad credit platform focused on the lower middle market, specifically entrepreneur-owned businesses. We now have an institutional credit platform focused on loan sizes up to $10+ million in a part of the market that is severely underserved. What makes our platform unique is our ability to structure deals around a broad set of borrower types, use of proceeds, and situations. No other platform serving the lower end of the market has our team, reach or capabilities.

The second reason and just as important is that our business evolved, and we recognized the need to be a thought-leader in key verticals. Stonegate was a first mover and thought-leader in providing ABL solutions to sponsor-backed, high growth consumer businesses and SaaS businesses. Stonegate’s SaaS capabilities focused on sponsor-backed companies are purely additive as SG Credit has completed approximately fifty SaaS financings to mostly bootstrapped companies. I started my career in private equity providing growth equity for SaaS businesses and very much understand the needs of founders in this sector.

The opportunity to obtain revolver capabilities across our platform, diversify sourcing channels to work with sponsors and become a market leader in highly sought-after verticals was too much to pass upon. It’s also important to say we ultimately did this because of the team at Stonegate. What we did not want to do was directly compete with the broader ABL industry – who we still very much view as our partner. We never considered entry into that market as that shipped sailed as conventional ABL is becoming mature and a race to obtain scale.

ABL Advisor: Why Stonegate? To clarify, what made the Stonegate business and team so attractive to SG Credit?

Cole: The team, their track record and clear, differentiated approach to the market. Our entire business and strategy are based on differentiated products, genuine people and markets we can lead. The consumer vertical, just like the SaaS vertical, is starting to get a lot of attention from the lending community. These specialized industries require deeper understanding of collateral, similar to other specialized industries such as healthcare and traditional retail. We get excited about verticals where we can be a true market leader and we can now say that about consumer and SaaS. In addition, the team at Stonegate is fully onboard and these opportunities are few and far between to work with a like-minded team who treats a business like it’s their own. This stems from the fact that Stonegate was founded by a beloved industry visionary in Darren Latimer, who hand-picked an incredible team that remains in charge. We never take the people aspect for granted.

We ended up getting the trifecta of people, platform and market leadership that also provides our combined company with national reach and scale.

ABL Advisor: Please tell us about the market you will be pursing in the ABL space. For example, company revenue levels, transaction ranges, credit profiles, industry focus and ABL transaction types.

Cole: Key priorities are high-growth consumer facing businesses as well as emerging SaaS businesses. Secondarily, we will pursue true special situations that don’t fit the box of traditional ABL and that provide premium pricing. Typical non-SaaS revenues range from $10+ million to over $100 million and facility sizes range from $2+ million to $10+ million. SaaS revenues typically range from $3 million in ARR to $10+ million.

The credit types are typically transitory in nature in that these companies are typically trading profit for growth and highly focused on creating exponential equity value. Stonegate has terrific relationships with the consumer and SaaS investment communities who prefer a lender that understands their industries and can underwrite growth. Stonegate became a preferred partner by being able to strategically make IP or enterprise loans to complement their ABL structures.

I also believe it is important to say what we don’t want to do, which is to compete in what we call generalist ABL defined as the traditional manufacturer, distributor and service businesses. There is simply too much competition in this market with the industry leaders having dominant positions.

ABL Advisor: Tell us a bit about how the SG Credit team will work with the Stonegate team and how the two will “attack” the market to achieve greater market share? In other words, does “1+1 = more than 2”?

Cole: Firstly, we are now one company. The best way to think about our go-forward strategy is one national originations team, but two separate business units with dedicated leadership, underwriting and portfolio teams. Much like how many groups use one team to market factoring and ABL but keep underwriting and portfolio separate for both. Ultimately, the core products – ABL and cash flow – are very different and we recognize the need to keep underwriting and portfolio as separate business units.

The 1+1=3 comes into play for clients that have a larger term component than ABL and it makes sense for SG Credit to control the revolver. Vice versa, Stonegate plans to go deeper into its verticals, and often many of these companies need IP or enterprise value term loans. What won’t change is the core product offering and special DNA that each company possesses. We believe Stonegate’s industry expertise combined with SG’s non-ABL product expertise provides for significant opportunity to deliver complete solutions to the market. The same folks underwriting and managing credits will still be doing so, only now they will have more capabilities to offer clients and the market.

One thing we want to make clear is that SG Credit’s partnership approach to working with other lenders hasn’t changed. ABLs and banks should still call us anytime they need a partner. The core SG business has expanded over the years but partnering with banks and ABLs is still a critical component of our business strategy.

ABL Advisor: How will the businesses interface? Will the leadership team at Stonegate remain in place and how will the two teams (SG and Stonegate) work to create a cohesive approach to the market?

Cole: The leadership team at Stonegate will absolutely remain in place. Planning has already begun for a cohesive approach to the market with the goal of simplifying messaging and educating referral sources. Acquisitions are never easy, but the core Stonegate team has been there from the beginning, so the only difference is that we are super-charging their originations. The companies have a common culture so putting them together is not that difficult. The senior executives have known each other for many years and in some cases have been colleagues.

ABL Advisor: Competition is certainly fierce today among bank and non-bank lenders. What can the market expect to see from SG in the coming years and what do you see as a major trend in the coming 12 months?

Cole: The market is fierce, which is why we and every market participant should be re-thinking their business. There are three major trends happening right now: Consolidation, Scale and Specialization. For us, it’s all about specialization. We are very strong in several verticals with a focus on loan sizes below $20 million. These verticals are consumer products, SaaS, high net worth and special situations. Our strategy is to have three to five direct competitors within each vertical where we can get premium pricing rather than fifty direct competitors in conventional lending opportunities.

Consolidation and scale have transformed the ABL industry and now more than ever you need specialization as a point-of-difference. We compete and go after specialized industries where we know the market and know where we can go deeper as part of getting premium returns. Now that many other platforms have achieved scale, we believe the next battleground will be consolidation of specialized verticals. Recent market comps including Stonegate suggest as much.

ABL Advisor: Thank you for joing me today Marc. Do you have any parting thoughts?

Cole: It’s an exciting time to be in this industry. We are in the midst of constant change whether it be M&A, technology or leadership change. We started the predecessor to SG Credit back in 2015 and it’s almost unrecognizable how far we have come. That said, we believe we are still in the early stages of what we can become as we continue to add like-minded talent and evaluate expanding into new businesses.

Link to article here.