And at a time when securing venture capital funds is not particularly easy, lighter capital Continues to provide undiluted financing, in the form of revenue-based financing, to technology startups.
The company, led by CEO Melissa Widener, was founded in 2010 and has since provided hundreds of millions of dollars in funding via more than 1,100 rounds of growth capital without the startups having to sell equity. It also exceeded $350 million in growth capital.
Lighter Capital has designed a revenue-based financing model for technology companies in the SaaS, technology services, subscription services, and digital media sectors that already have revenue and are growing. It offers adaptive payment terms, term financing featuring fixed monthly payments and contract financing.
Today, Lighter Capital is the latest company to raise its own financing – $130 million in capital commitments for a credit facility. The facility is supported by existing investors Apollo Global Management, i80, Invest Victoria and iPartners, an Australian private trust.
Alternative funding is a hot topic at the moment, and there are a number of companies in the US offering revenue-based funding to SaaS companies, including Capchase, Pipe, Founderpath, Arc, and most recently, Efficient Capital Labs.
This is due to several reasons: One of them, which has been widely reported, is that venture capitalists backed off their funding last year. And second, more founders are becoming more aware that alternative financing is an option for them, especially after the Silicon Valley bank collapse, Widener told TechCrunch.
“One of the biggest challenges has been educating companies that there is an alternative to dilute financing,” she said. “Venture capital firms fund a very small percentage of tech companies, like 1% of tech companies, so in the last few years, people are starting to realize that you can actually get funding other than going the venture capital route.”
As a result, Lighter Capital has seen more companies coming in that would otherwise have gone to the venture capital firm. Widner, who has been a venture capitalist herself for two decades, said some companies did not want to do a price round in this market or were looking for undiluted financing. In addition, the company was seeing companies already coming in pretty good shape, with about 24 months of runway, but wanted some extra support in tough economic times.
Widener called the company’s inbound funnel “explosive”, resulting in 2022 being “the biggest year ever in company history” for Lighter Capital.
The proceeds from Lighter Capital’s new financing vehicle are expected to fund hundreds of early-stage companies across the United States, Canada and Australia. It offers funding from $50,000 to $4 million, with an average financing of $600,000.
“SaaS revenue in general is predictable,” Widener said. “We’ve spent over a decade building the technology to be able to predict a company’s revenue, and we usually do a better job of forecasting their revenue than companies. Our financing or loan rounds are usually three years, so we’re really looking at being able to predict what If the company’s revenues will be sufficient to pay off the capital in three years.