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.
The Company: Venture-backed SaaS platform for digital publishing. Revenue: $6MM | Equity Raised: $30MM.
The Financing Situation: The Company’s existing debt facility was maturing and the incumbent lender was unwilling to extend due to lender fatigue and other circumstances. SG was brought in alongside an equity contribution to refinance the debt and provide additional working capital.
The Solution: SG was able to quickly get comfortable with the business due to the contracted recurring revenue, continued equity support, and opening liquidity. SG provided a $1.5MM non-formula, structured senior secured loan. The incumbent lender successfully exited the credit as desired and the Company received additional working capital. SG closed this transaction within two weeks.
Venture-backed, cloud-based software platform primarily targeting outbound sales organizations.
The Financing Situation:
The Company experienced significant year-over-year growth but the Company’s existing credit facility was maturing and the incumbent lender did not want to extend its maturity date. Additionally, the Company was seeking non-dilutive growth capital to execute on its sales pipeline and increase ARR to improve its valuation prior to raising additional equity.
SGCP was able to quickly get comfortable given the rapid growth, contracted recurring revenue, enterprise customer base and strong management team to provide a $6.5 million senior secured credit facility that was bifurcated into a $3.5 million interest-only loan and $3 million term loan. SGCP provided this structure to close the deal quickly and to bridge the Company to a new senior lender. The new senior lender will refinance SGCP’s $3.5 million interest-only loan and SGCP will then subordinate its $3.0 million term loan under its typical second lien structure.
This transaction highlights SGCP’s ability to write larger checks as a result of its recent capital raise as well as our ability to provide a one-stop solution.
Non-VC/sponsor backed cloud-based video storage provider for smart home devices.
Revenue: $10mm+ run rate | EBITDA: Break-even
The Financing Situation:
The Company was searching for a non-dilutive capital solution to help finance continued growth – customer acquisition costs and new data center facility capex. Bank financing was not an option given a combination of the Company’s non-institutional ownership and current financial performance. ABL financing was not an option given the Company’s direct-to-consumer model.
SGCP was able to get comfortable with the Company’s lack of historical profitability given the growing monthly recurring revenue, data center assets, and dedicated entrepreneur. SGCP provided a non-dilutive $2.0 million senior secured loan that will enable the Company to continue rapid growth while preserving existing shareholder equity.
Cloud-based media monitoring and intelligence platform with contracted, recurring revenue.
Revenue: $15mm | EBITDA: $1.5mm | Equity Raised: $10mm
The Financing Situation:
The Company had a line of credit as well as a term loan in place with a Bank. Due to lender fatigue and technical default (financial covenant compliance) the Bank wanted to exit the credit.
Super G was able to get comfortable with the business due to the recurring revenue, continued equity support, and strong management team. Super G provided a $2.0 million bifurcated credit facility to retire the Bank’s credit facility as well as provide additional working capital. Super G’s $2.0 million bifurcated credit facility consisted of a $750k interest-only loan and a $1.25 million amortizing term loan. Super G provided this structure to bridge the Company to a new senior lender. The new senior lender will refinance Super G’s $750k interest-only loan and Super G will then subordinate its $1.25 million term loan under its typical second lien structure.
Provider of a SaaS based system that assists K-12 educators and administrators in managing, overseeing and enhancing their students’ engagement in digital learning environments.
The Financing Situation:
Due to the cyclical nature of education-based budgeting and spending in school districts, cash flow in the EdTech space is highly seasonal. Contracts are paid on an annual basis with the vast majority coming in during one quarter of the year. This leads to temporary cash shortfalls which were historically financed primarily through equity from investors. Knowing the company was very close to attaining “escape velocity” and not wanting to further dilute equity, they sought out venture debt as an alternative financing option.
Led by a strong management team, demonstrating solid revenue growth since inception, and having already completed a cost restructuring during 2017, Super G recognized the company was poised for profitability and overall success with the help of some working capital cushion in the near term. Super G was able to work quickly to complete diligence and documentation in order to fund a $1.25MM loan within three weeks and solve the company’s seasonal cash shortfall.
The Company: Sponsor-backed, cloud-based software platform primarily marketed to outbound sales organizations.
The Financing Situation: The Company raised over $3MM in a Series A equity round and experienced significant growth over the prior three years. The Company needed growth capital to execute on its sales pipeline, but did not want to raise additional equity before its Series B round due to dilution concerns at the current valuation. The Company wanted to grow revenue as much as possible in order to increase its valuation prior to raising additional equity.
The Solution: Super G provided a non-dilutive senior secured term loan. This structure enabled the Company to continue its growth trajectory and increase its valuation before raising additional equity. Super G was able to quickly get comfortable given the rapid growth, contracted recurring revenue and strong management team. The amount of time from signed term sheet to closing was less than two weeks.
Super G’s non-dilutive growth capital loans help technology companies extend runway and reach milestones which increase valuation while protecting equity.
Venture-backed SaaS provider for content management and digital publishing.
Revenue: $8mm | Equity Raised: $22mm
The Financing Situation:
The Company was placed in the Bank’s special assets division due to a covenant violation. Although the Company continued to perform, the Bank wanted to exit the credit. Super G was brought in to offboard the client and provide additional working capital.
Super G was able to quickly get comfortable with the business due to the contracted recurring revenue and equity support. Super G provided a $1.5mm highly structured, nonformula-based, senior secured loan. The Bank successfully offboarded the client as desired and the Company received additional working capital.
Software as a service platform that provides data management solutions to insurance agencies, government agencies, hospitals and other healthcare organizations. The Company’s service offering includes enrollment and network management, medical credential verification, continuous monitoring of provider data, and claims screening.
The Financing Solution:
The Company was in the process of raising a large strategic equity round and was seeking interim (“bridge”) capital to support its continued growth as well as general working capital cushion to alleviate equity closing pressure. The Company had an existing senior term loan with an affiliate of funds managed by Fortress Investment Group (“Fortress”) secured by the Company’s intellectual property and all other business assets so traditional working capital solutions such as asset based lending/factoring were not an option due to seniority issues as well as insufficient borrowing base availability. Additionally, given the anticipated time horizon to a large equity raise, the Company preferred non-dilutive capital versus convertible note/shareholder equity options.
Super G was able to work closely with Fortress to provide a $1.5 million structured working capital solution by carving out specific contracts as collateral and lending against the annual value of those contracts (i.e. Super G was senior secured on specific contracts and second lien on all other assets). This allowed the Company to have much more access to cash immediately then they could with a traditional asset based lender. This unique structure combined with non-dilutive capital were the key points of difference when the Company made its bridge financing decision. In addition to the contract collateral, the key underwriting criteria for this deal was the Company’s unique software offering, the management team, customer stickiness, and ability to service Super G’s debt through operational cash flow in the event an equity raise does not occur.
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