Senior

SG Credit Profile: Technology (SaaS)

The Company: A leading online invitation and digital greeting card subscription platform.

The Financing Situation: The Company was seeking non-dilutive growth capital to acquire VidHug, an easy-to-use video platform that enables you to request, collect, and combine videos to create a personalized and meaningful montage for celebrations and holidays.

The Solution: SG was able to get comfortable with the transaction due to the Company’s committed management team, consistent financial performance, recurring revenue metrics, and overall industry trends. SG’s solution allowed the Company to complete an accretive acquisition without dilution and Punchbowl leveraged the acquired platform to launch Memento.com. The Company now offers a comprehensive technology platform for celebrations, holidays, and meaningful life memories.

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

For more information about this announcement, please contact Kristen Elworthy at Seven Hills Communications (punchbowl@sevenhillscommunications.com).

SG Credit Profile: Technology (SaaS)

The Company: Provider of B2B and B2C telephony-related security services.

The Financing Situation: The Company was seeking non-dilutive growth capital to execute on sales & marketing initiatives and have the ability to close quickly on accretive acquisitions.

The Solution: SG was able to get comfortable with the transaction due to the Company’s consistent growth in MRR, strong retention metrics, profitability, and experienced management team. Within 3 weeks from signed term sheet, SG provided a $2MM growth capital facility with $1.5MM funded and an additional $500K tranche available based on continued growth.

SG Credit Profile: Technology (SaaS)

The Company: Software as a Service platform that provides AI-powered marketing analytics. The platform provides an end-to-end suite of tools that allow clients to research and measure their marketing investments and maximize ROI.

The Financing Situation: The Company’s existing bank credit facility was no longer a strategic fit and the Company was seeking additional non-dilutive capital to help execute on its growing sales pipeline.

The Solution: SG was able to get comfortable with the transaction due to the Company’s strong management team, blue chip customer base, enterprise value, and its supportive cap table. SG provided a $2MM senior secured facility with an interest-only period and modest amortization to payoff the bank and support the Company’s ARR growth with non-dilutive capital.

The Company: Digital signage SaaS platform enabling SMB & enterprise customers to easily create and manage content in real time on any number of displays, anywhere in the world. Ownership: Founders & Management. Run Rate ARR: $3mm+.

The Financing Situation: The Company had been bootstrapped with founders’ capital to date and was seeking a non-dilutive capital solution to (i) continue to grow ARR and in turn enterprise value prior to an institutional equity raise and (ii) bridge to profitability.

The Solution: SG was able to get comfortable with the Company’s earlier stage revenue due to the Company’s proven technology with enterprise clients, strong SaaS metrics, and the founders’ successful track record and continued support of the business. SG provided a $2.2mm senior secured facility with an interest-only period until the Company reaches profitability.

Product Type: High Net Worth Guarantor

The Company:
A privately-held family investment vehicle.

The Financing Situation:
A high net-worth couple (“the Guarantors”), via the family investment vehicle, were in the later stages of a ground-up construction on a new home. The total cost had eclipsed the initial budget and the additional capital required to complete construction was beyond the loan-to-value comfort level for traditional lenders.

The Solution:
SG was able to underwrite this transaction by taking a holistic approach toward the Guarantors’ personal financial profile, and not restricting leverage solely to the subject property. SG worked quickly to provide a $1.0MM loan structured around the Guarantors’ personal assets and diversified income streams.

This transaction highlights SG’s ability to structure and underwrite guarantor-based loans. While many of you know us as a cash flow-based lender, we now provide special situation (balance sheet) loans requiring creativity, flexibility, and speed to close.

The Company:

A single-asset real estate holding company owned by a prominent carwash company in the Midwest. The carwash company is just one subsidiary of a broader investment company with interests in a multitude of industries.

The Financing Situation:

The Company had an executed purchase agreement on a property that it intended to acquire and construct an expansionary carwash location under its existing brand. The Company needed 100% upfront debt financing to close on the acquisition quickly and working capital for the entitlement process before seeking construction financing.

The Solution:

SG underwrote the real estate as well as the personal guarantees of the two founders, who maintained significant outside personal liquidity as well as equity in various real estate and business holdings. The strong personal balance sheets of the guarantors allowed SG to be aggressive with its advance rate on the real estate collateral (>100% LTV when including additional working capital provided) and SG’s capital was non-dilutive.

This transaction underscores SG’s ability and willingness to structure and underwrite collateral based / guarantor-based loans. While many of you know us as a cash flow-based lender, we now provide special situation (balance sheet) loans requiring creativity, flexibility, and speed to close. We also have a strong interest in providing customized solutions for liquidity constrained high net worth entrepreneurs.

The Company: A newly formed pharmaceutical company setup specifically to acquire, promote, and sell four prescription pharmaceutical products.

The Financing Situation: Before SG became involved, the Company had agreed to purchase four prescription pharmaceutical products using debt financing with an alternative lender. Due to capital raising issues, this lender defaulted on its financing obligation, which eroded the seller’s confidence that the deal would be finalized. When SG was introduced to the Company, the seller was fatigued and highly motivated to consummate the transaction within a two week period or was prepared to walk away. Additionally, the Company’s senior management did not want to risk losing the opportunity to acquire the assets at an attractive purchase price. Given the Company’s pro-forma revenue level was below SG’s investment criteria, SG looked to the personal balance sheet of the founder to structure a transaction and execute within the short timeframe.

The Solution: SG was able to work quickly and creatively to provide a $3.35MM loan structured primarily around the founder’s personal assets (real estate and marketable securities). SG’s speed to close allowed the Company to close the asset purchase and begin rebuilding the revenue base back to historical levels. SG’s facility is viewed by the Company as bridge financing until a broader capital facility can be raised.

This transaction highlights SG’s ability to structure and underwrite guarantor-based loans requiring creativity, flexibility, and speed to close.

The Company:

A single-asset real estate holding company operating as a subsidiary of a broader multi-family / student housing real estate syndication portfolio.

 The Financing Situation:

The Company needed capital quickly to execute on additional portfolio purchases and support working capital at the parent level, where COVID-19 restrictions had temporarily affected occupancy rates at some of the student housing assets.

 The Solution:

Although the parent company and guarantor had a demonstrated history of success, there was no single property that had a value sufficient to provide collateral coverage on the loan. By utilizing a holistic approach of looking at both business and guarantor assets, SG was able to get comfortable with a $6MM facility secured by two properties.

This transaction highlights SG’s ability to structure and underwrite collateral-based / guarantor-based loans. While many of you know us as a cash flow-based lender, we now provide special situation (balance sheet) loans requiring creativity, flexibility, and speed to close.

The Company: Sponsor-backed document scanning company that provides an array of workflow optimization services. The Company’s scanning service model, coupled with its cloud-based data hosting platform, enables it to transform physical documents to actionable digital data for its customers. Recurring Revenue: $12.5MM | Services Revenue: $3MM.

The Financing Situation: For the past few years, the Company was focused on developing its technology platform and implementing several key channel partnerships. Though the Company expects these dynamics to be fruitful in the long-term, the short-term effect was a decrease in profitability. The Company’s existing lender had provided a traditional asset-based line of credit based on eligible accounts receivable. This structure did not provide the Company with the flexibility it needed to expand sales and marketing initiatives through its new channel partnerships. Lender and borrower fatigue set in, so the Company went to market to find a debt partner that could a) look for value beyond just the assets, and b) scale with it as it executed on its growth strategy.

The Solution: SG was able to get comfortable with the Company’s strong pipeline of contracted revenue, return to profitability, revenue retention rate greater than 90%, and plethora of expansion opportunities through its new channel partnerships. SG provided a senior secured, $3MM growth capital loan structured around recurring revenue, proforma cash flow and total leverage.

The Company: Southeast based consumer credit and identity solutions software-as-a-service provider, majority owned by founder & CEO Ed Margolin. Visit Fraud Protection Network’s website to learn more.

The Financing Situation: The Company had previously financed its growth with a combination of equity and convertible notes.  With new product rollouts and strategic partnerships in 2020 creating accelerated growth, the Company was seeking non-dilutive capital to finance its working capital needs and extinguish convertible notes in order to preserve equity.

The Solution: SG was able to quickly get comfortable with the transaction due to the rapidly growing monthly recurring revenue, strong industry retention rates, and overall financial health of the company.  SG structured a covenant-lite $2.5MM loan with a tailored repayment schedule around cash flow that bought out the convertible notes to avoid further dilution and provided additional liquidity for the Company to continue its growth trajectory without equity support.

This transaction demonstrates SG’s ability to underwrite SaaS / recurring revenue loans. While many of you know us as a cash flow based lender, we now provide non-dilutive SaaS / recurring revenue loans requiring creativity, flexibility, and speed to close. Click HERE for a link to our SaaS / recurring revenue one pager to learn more.