Software and Technology firms face a unique financing challenge. Their main assets are intellectual property and long-term service contracts, neither of which traditional financing sources will lend against.
They seek to balance the need for capital to fund growth and the desire to avoid the dilution associated with an additional equity round. Many times, a higher valuation can be achieved by postponing the equity round.
We have lenders who will provide non-dilutive funding based on a percentage of the annual recurring revenue generated from long-term B2B contracts.
These lenders are looking for situations with the following characteristics:
- B2B businesses
- One-to-three-year contracts
- Demonstrated Growth
- Sufficient liquidity to cover 6 month of cash burn
Lending facilities typically include the following general terms:
- facility size ranging from 20% to 60% of ARR
- implicate interest rate ranging from the mid to upper teens
- No equity give-up or dilution and
- No personal guarantees
If your SaaS enterprise would benefit from this type of non-dilutive capital, contact me at [email protected] to review your situation and explore available funding options.