Funding Options for Salesforce Partners
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Funding Options for Salesforce Partners

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What's the right funding option for your Salesforce biz? Watch this webinar and hear directly from investors at Emergence Capital & Lighter Capital. ...

What's the right funding option for your Salesforce biz? Watch this webinar and hear directly from investors at Emergence Capital & Lighter Capital.

Learn which funding options best suit each stage of the business growth cycle - from startup through the $10M revenue milestone - and what to consider when evaluating those options for your business.

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Funding Options for Salesforce Partners Funding Options for Salesforce Partners Presentation Transcript

  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Which funding option is right for your business? Financing options for Salesforce Partners June 5, 2014
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Emergence Capital Partners Leading early stage Silicon Valley VC in SaaS and cloud-based services › 100% focused on cloud software for business users, including software-as-a- service “SaaS,” mobile and information services. › $575 million under management across 3 funds Building market leaders Our first investment. (market cap today: $32 billion) SuccessFactors- IPO in 2007, acquired by SAP for $3.4 billion Yammer – acquired by Microsoft for $1.2 billion EchoSign – purchased by Adobe Veeva – IPO (VEEV) in October 2013 (market cap today: $3 billion) And Box, Lithium, InsideView, Hightail, Intacct, ServiceMax, Doximity, Insightly, SteelBrick and many more. p2
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Sean Jacobsohn Venture Partner at Emergence Capital Partners Cornerstone OnDemand (VP Channel Management) Joined at $7M revenue, now $300M revenue & $2B public company WageWorks (VP Sales & Partner Development) Joined at $3M revenue, now $250M revenue & $1.5B public company Elance (merged with oDesk) Joined at $0 revenue, now $100M revenue Hightail (VP Worldwide Alliances) Emergence Capital portfolio company formerly known as YouSendIt Emergence Joined as Venture Partner Sourcing business cloud startups for $250M fund. Works closely with portfolio companies Navera, Intacct, InsideView 15 years in business cloud Sean Jacobsohn Venture Partner, Emergence Capital Partners p3
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Lighter Capital › Lends $50K-$1M in growth capital › Entrepreneur-friendly structure called a “RevenueLoan™” – revenue-based finance › Tech-enabled analysis, diligence, underwriting and servicing. Goal: make funding fast and easy. › Currently funding 3-4 total companies per month, including 1 Salesforce Partner per month p4 Examples of Salesforce Partners funded
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 BJ Lackland CEO at Lighter Capital BJ Lackland CEO, Lighter Capital Lighter Capital CEO in 2012 Power Efficiency Corporation CFO & Director Small public energy efficiency technology company, raised $20M in equity financing, $5M in various debt financings Summit Energy Ventures VP & Director (Partner) $25M venture capital fund focused on Series A & B rounds, PIPEs, convertible debt Other Active angel investor and consultant to erarly stage companies. Senior finance and marketing leader at tech startups, EnCompass Globalization and webStrategic. p5 15 years financing early stage tech companies, either as an entrepreneur or investor. Over $50M raised or invested
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Today’s agenda: Funding options for various “startup” stages of the business lifecycle Funding options for Salesforce Partners More on Venture Capital – Sean Jacobsohn More on RevenueLoans– BJ Lackland Q&A p6
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Funding Options Which funding option is right for your business?
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Number of Financings Source: US Census Bureau, Crunchbase, CB Insights ~6 Million US Business 90% of whom have 20 or fewer employees 127,100 small software companies 2,283 Angel and Seed Investments Seed / Angel = 1.8% of small software companies per year 1,009 Series A Investments Series A = 0.8% of small software companies per year p8
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 A snapshot of funding options by stage EstablishedIdeation Launch & Traction Growth & Scale Breakout Bootstrap/Self Family & Friends Angels and Incubators Revenue-Based Financing VC (less pre-product/revenue than in the past, more at later stages) Banks (w/o VC investor) Strategic Investors Note: These are tendencies, NOT hard and fast rules. Many financings happen outside these bands! $MMs$0 $0-$1M $1M-$5M $5M+ p9
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Different companies require different ‘financing roadmaps’ What type of business are you building? › Long term goals, strategy and business model drive financing decisions › Different ‘financing roadmaps’ available, depending on the business › Key questions: › How much capital is required for the business to succeed? › What’s the revenue / cash flow / profitability profile you can attain? › What is your ultimate goal for the biz? p10
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Venture Capital Which funding option is right for your business?
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 VC Math Investment Total Value › 3 Total Loss $ 15 $ 0 › 3 Return Investment (1x) $ 15 $ 15 › 3 Sell for profit (4x) $ 15 $ 60 › 1 Home run (10x) $ 5 $ 50 $50 $ 125 Typical Results – 10 Investments We are wrong 60% of the time! p12
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Companies › 1200 review materials › 500 face-to-face 40% › 50 due diligence x 10% › 10 investments x 20% < 1.0% Typical Pipeline for 10 investments VC Math p13
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 p14
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Examples of 1200 Leads Not competitive with any portfolio company Not leveraging a connection for an introduction Compelling concise elevator pitch Not reading our firm’s website to see our focus area Strong founder Not looking at my LinkedIn bio; call me wrong name p15
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Examples of 500 Meetings Demonstrated product/ market fit; outside testing phase Solves an important problem outside Silicon Valley Well versed on market/competition Don’t know actual numbers or metrics well Not sure how to get to $1M, but expect $50M in 5 years Not strong technical team p16
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Examples of 50 Due Diligence 2-3X annual growth in revenue Positive customer references Positive team references High churn Not met projections from prior meeting Concentration of customer base p17
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Examples of 10 Investments Efficient customer acquisition Strong team, where people followed CEO Strategic to VC Portfolio Market size ($300M vs. $1B) Burn rate (need to raise too soon) Valuation too high p18
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Revenue Loans Which funding option is right for your business?
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 What are RevenueLoans™? p20 Up to $1M or up to 33% of annualized revenue run rate › No set interest rate, payment, or maturity › Monthly payments are a fixed percent of net cash receipts › Matures in 5 years or when cumulative payments equal a set amount, usually 1.5 – 2.5x principal › Small upside participation Example Loan › Annual Revenues: $1M › Principal: $200K › Maturity: 5 years › Payment: 5% of monthly revenue › Repayment: 1.75x principal ($350K) › Upside Participation: $50K at liquidity event CumulativePayments Principal Loan Maturity 1.5x to 2.5x Principal
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 How Does it Work? p21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Period Loan payments are based on a percent of the company’s revenue. Company revenue Loan payment
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Early growth stage technology companies Lighter Capital’s Investment Criteria Financials: › Revenue Min: $15k+ / month › Gross Margin: High (50%+) › Profitability: Not required, but clear path to profitability from our funds › Other Debt: Not too high (unless convertible debt) › Customer Base: No major concentration › Recurring Revenue or Repeat Customers Management: › High ownership, full time dedication Geography: › HQ in US or Canada Use of Funds: › Growth: Sales, marketing, product p22 Software, SaaS, digital media, tech services and similar
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Lighter Capital’s Funding Process Get funded in as little a four weeks p23 Result: We fund 18% of companies that meet our criteria Company snapshot Create a high level company overview online in 10 minutes. Getting the details We will send you a link to upload and provide financial statements, customer and team information followed by one or two calls with our underwriting team. Closing the deal We issue a Term Sheet for review. Once agreed, you are funded STEP 1 STEP 2 STEP 3
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Summary: How Do They Compare? Bank / Debt Revenue-Based Finance Venture Capital Guarantees & Controls Financial Covenants Sometimes Personal Guarantees No Financial Covenants No Personal Guarantees Partner in the Business (Board Seat, voting shareholder) Added Value Low / None Medium High Dilution None / Low Low: Small Upside Participation High Payment Flexibility Low: Fixed Payments Medium: Variable Payments High: No Payments Speed 4-8 months 4 weeks Highly variable. Typical 3-6 months focused effort p24
  • EMERGENCE CAPITAL PARTNERS & LIGHTER CAPITAL WEBINAR © COPYRIGHT 2014 Thanks! Fundraising Resources for Salesforce ISV, OEM & SI Partners www.lightercapital.com/salesforce Apply Online for a RevenueLoan from Lighter Capital secure.lightercapital.com/apply