Software & Technology

SG Credit Profile: SaaS

The Target: Corporate travel and entertainment software, data integration, and business intelligence (BI) provider for large enterprises and travel management companies.

The Buyer: Enterprise software operating company backed by private equity.

The Financing Situation: The Buyer was seeking a debt facility to supplement the equity contribution made to purchase the Target.

The Solution: SG structured a $4 million term loan to support the closing of the acquisition. SG was able to get comfortable based on the Company’s recurring revenue, strong SaaS metrics, experienced management team, and the strength of the Buyer.

SG Credit Profile: SaaS

The Company: Provider of procurement and spend management software to mid-market businesses.

The Financing Situation: The Company had legacy bank debt from a previous acquisition that was underwritten primarily by cash flow, not recurring revenue. The Company’s growth plan called for re-investing all excess cash flow into growth, which conflicted with the profitability-based covenants of its existing credit facility. The existing bank lender was unable to re-underwrite its loan based on recurring revenue so sought to exit the loan at maturity. The Company needed an experienced tech lending partner who better understood its SaaS business model and could scale with the Company as it executed on its growth objectives.

The Solution: SG structured a $2.75 million term loan to pay off the Company’s existing lender and provide additional liquidity to support its continued growth plan. SG was able to get comfortable based on the Company’s recurring revenue, strong SaaS metrics, and experienced management team.

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.

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.

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.

The Company: Founder-owned commercial real estate software-as-a-service (“SaaS”) platform.

The Financing Situation: The Company’s legacy business has matured to a stable level with long-term contracted customers. Through a majority-owned subsidiary, the Company is developing a complementary SaaS platform. The new platform is still in its early stages of deployment and needed growth capital to fine-tune software development and expand marketing initiatives.

The Solution: Despite the current market conditions, SG was able to get comfortable with the contracted recurring revenue of the legacy business, its mission critical software, and the counter cyclicality of the platform. SG worked quickly to provide a senior secured $4.5MM growth capital loan facility within 10 days of receiving a signed term sheet.

The Company:  Founder-owned AI software subscription and services company providing a management platform for microservice-based enterprise applications.  Services Revenue: $10MM | SaaS Revenue: $3MM.

The Financing Situation:  The Company had successfully grown their annual recurring revenue (ARR) base from $2MM to $3MM over the course of 12 months with no outside investment. In order to raise an equity round at a high valuation, they knew they needed to drive ARR up to $5MM in 2020. This would require investment in software development and hiring additional sales personnel, but the Company was under a cash constraint due to the cyclical nature of their contracts. The majority of the Company’s contracts are tied to government agencies and therefore tied directly to the annual government budget and spending cycle. The Company needed near term liquidity to fund R&D and sales initiatives in order to achieve their revenue growth goals in 2020.

The Solution: SG was impressed with the Company’s software platform, organic growth, strong pipeline of contracted revenue, and ability to reach positive cash flow with no equity financing and minimal debt financing. SG provided a senior secured, $3MM growth capital loan structured around an ARR borrowing base and provided tailored amortization around the Company’s cyclical cash flow.

The Company: Founder-owned managed service provider offering leading SD-WAN and edge solutions to businesses around the world.

The Financing Situation: The Company demonstrated significant year-over-year growth and had recently signed several large, multi-year contracts with new customers. The Company needed upfront working capital to invest in additional people costs in order to effectively perform on upcoming contracts. Additionally, due to the timing of annual payments, monthly cashflow could be lumpy. The Company needed a flexible, quick-to-close solution and the owners preferred to finance the Company’s capital need with non-dilutive debt rather than equity.

The Solution: SG Credit was impressed with the Company’s large recurring revenue base, strong pipeline of signed contracts and substantial enterprise value. SG Credit provided a second lien $1.5MM loan behind the Company’s existing factoring relationship, which provided the Company with enough working capital to smooth out monthly cashflow and successfully perform on the recently signed contracts.

The Company: Enterprise SaaS platform that enables companies to prepare and oversee RFPs and other business responses with speed, accuracy, and compliance. Recurring Revenue: $4.5MM.

The Financing Situation: The private equity backed Company was emerging from an operational restructuring and planned to rebuild its tech platform to increase functionality, improve UX, and drive sales. The Company’s existing bank lender was not willing to finance these initiatives so SG Credit was approached to refinance the existing bank lender and provide additional liquidity so the Company could execute on its plan.

The Solution: SG Credit provided the Company with a bifurcated loan structure consisting of a $1MM interest-only loan to refinance the existing debt and a $1MM term loan to finance the Company’s growth initiatives.  This structure provided the Company with 12+ months of runway and allowed the Company’s existing bank lender to exit the credit as desired.  SG Credit was able to close the deal within 3 weeks after quickly getting comfortable with the Company’s recurring revenue, client base quality, low churn, strength of the new management team, and continued shareholder support.