Lighter Capital has been making some tech and business headlines lately, and of course we love seeing our “name in lights.” But it’s also satisfying to see media and influencers providing more context and information about financing alternatives for entrepreneurs, particularly as Angel and VC funding tightens up for tech startups.
Forbes contributor Moira Vetter talked with one of our most successful Lighter Capital “alumni” companies about how they used revenue-based financing to grow while preserving equity in “MapAnything Uses Lighter Capital To Preserve Equity Prior To Tier One VC Round.”
John Stewart, the Co-Founder and CEO of MapAnything, says “Our company wouldn’t have existed if no one had gambled on us — and BJ Lackland did.”
That “gamble” led to 5 rounds of financing from Lighter Capital, which helped the company get to the next level, in a big way.
“MapAnything graduated to the big boys — tier one VCs. And they didn’t need a seed round; they were able to move directly into Series A funding,” notes Vetter.
“Lighter Capital understands the plight of entrepreneurs juggling the priorities of building a company while funding it. They use technology to expedite the process and make it more efficient. Once a techie, always a techie, Lackland even calls what they do capital as a service (CaaS).”
“Know when the time is right” is one of the key themes of this recent post on Fortune by our CEO BJ Lackland called “3 Reasons You Shouldn’t Give Up Equity in Your Company.” He walks through how VCs work, noting that VCs “swing for the fences” when they invest, looking for returns of 10-20x, along with a large ownership stake.
“You can get money from other sources, such as a Revenue Loan, that don’t have the same ownership and control requirements as VC funding, so they’re not dilutive,” he notes.
Victoria Silchenko talked with us for her great post on HuffPost Business about royalty-based financing: “There’s a New-Old Sherriff in Town: Royalty Financing for Young Ventures.” Royalty (or revenue) based financing is an option that has been overlooked by both entrepreneurs and investors and is a “next generation financing tool” according to Silchenko.
“On the one hand, you preserve your ownership position and control, get working capital needed so you can speed up your engine while deferring the sale of equity – which is the most expensive at the beginning of a company lifecycle. The investor, on the other hand, gets monthly payments and is not agonizing over a liquidity event...”
Spot on. We couldn’t agree more, because we’re all about providing entrepreneurs with growth funding so they can scale quickly. It takes about a month to get funding through our process, and we can provide follow on funding in as little as a week. Our team reviews a complete picture of the companies we fund – financials, revenue model, customer references, the management team, and more. We spend time getting to know our client companies and the founders that run them, and we have a solid understanding of how tech companies work, particularly SaaS businesses.
Nasdaq talked with BJ about our recent major funding announcement in “No Angel Investors, No Problem: This Tech Company Gives Startups An Alternative.” The Q&A includes helpful details about our growth capital criteria and process, and we learn more about BJ’s background as an angel investor, VC and entrepreneur.
“I spent a lot of time raising money. I love talking to entrepreneurs and commiserating about what they’re trying to do to raise funds …They didn’t get into business because they’re good at raising investment capital. They got into it because they spotted a need and wanted to do something about it …” he says.
We try to take the long view of helping out companies at any stage. We’ll talk to companies that don’t qualify for financing from us. It’s a small community – one of the benefits of concentrating on one industry. It’s amazing how, over time, things come around.”