Lighter Capital, a revenue-based lender focused on providing financing for tech companies made a major funding announcement recently that spelled good news for startup tech companies in need of capital.
Lighter Capital CEO BJ Lackland explained what the new funding means as well as how Lighter Capital fills a unique niche by providing operating capital to startups without requiring them to give up equity in their business.
Benzinga: What is the recent funding announcement all about?
BJ Lackland: Actually two things. One, we’ve raised $100 million in new funding to go make new loans. The second thing, adjoining that is that we raised $9 million in equity money for the company.
Primarily, of course, the $100 million is the bigger number and should help us make around 500 investments or so.
BZ: What does a loan from Lighter Capital look like?
Lackland: Essentially, it’s a royalty agreement. We try to make it the best of debt and equity. On the debt side, it’s not diluted for the entrepreneur. You’re not giving up equity and you’re not giving up control.
On the other side, the equity investor’s incentives are aligned with the entrepreneur. They’re partners in the business. In general, they both win or they both lose.
BZ: Your primary focus is tech companies. How does Lighter Capital define tech?
Lackland: We focus on companies that have high-margin recurring revenue streams. That fits with many tech companies involved in software and tech-enabled services.
At some point, we’ll venture beyond tech but what we really like to do is focus on a particular industry and serve them better. We want do this instead of being broad-based like many online lenders.
BZ: Can you be a little more specific about your lending focus?
Lackland: One area involves businesses that provide B2B software. We’ve provided five different financings over just about three years to one particular company, based in Charlotte, North Carolina, called Cloudbilt. Cloudbilt provides mapping capabilities inside Salesforce.
We fund quite a few independent software providers like that. This includes companies that provide sales commission software,