This document discusses funding options for growing SaaS companies. It provides an overview of BJ Lackland and his experience financing early stage tech companies. It then summarizes Lighter Capital's financing model of revenue-based financing, which provides capital to companies in exchange for a percentage of monthly revenue over time. The presentation outlines various funding paths like venture capital, debt, and blended models. It compares features of different funding sources and provides tips for selecting a funding path and preparing for funding.

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Funding Options
For Growing SaaS Companies

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About BJ Lackland
Lighter Capital: CEO since 2012
Power Efficiency Corporation: CFO & Director
Public energy 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 early
stage companies. Senior finance and marketing
leader at tech startups, EnCompass Globalization
and webStrategic.
MBA and MA in International Studies from University
of Washington
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BJ Lackland, CEO
Lighter Capital
15+ years financing
early stage tech
companies, either as an
entrepreneur or investor.
Over $50M raised or
invested

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About Lighter Capital
52%
25%
21%
2%
SaaS
SaaS + Service
Tech-enabled services
Digital Media
› 100+ financings across 70+ companies
› Almost 80% are SaaS
› Revenue Based Financing for tech companies
› $50k-$1mm per company
› Technology + Capital = Better for Entrepreneurs

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› The best of debt and equity – aligned interests with no dilution
› Essentially a royalty agreement
› Monthly payments = fixed % of revenue
› Fits SaaS
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What’s Revenue Based Financing?
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Company revenue
Loan payment
Example Financing
› $500K funding
› Payment: 5% of monthly revenue
› Repayment: 1.7x principal ($850K)
› Maturity: 5 years

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Today’sAgenda
Trends + Paths + Tradeoffs
Finding your funding path
Q&A
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Cost of Entry
Speed of
Innovation
More Startups
Angels/VC
Larger Funds
Series A is
The New B
Other Sources
Corporate
Venture
Debt + Crowd
funding
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The Funding Landscape

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Revenue$
5m
Established
Ideation
Launch &
Traction
Growth &
Scale
Breakout
Debt
Equity
Bootstrap / Friends & Family
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Funding Paths for Technology Startups
Incubator / Angels
1.
VC Backed
2.
Non VC
3.
Blended

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Non VC Funding Path: Growth without dilution
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› Who: A SaaS company providing mapping
and geo-analytics for Salesforce users.
› Funding: RevenueLoan from Lighter
Capital in 2012. Total of 5 financings for
$1M. The only outside money raised.
› Use of Funds: Product development,
marketing and expanding the sales team.
Today
› Millions in revenue
› #227 on 2014 Inc. 500 fastest growing
private companies in the U.S.
› #15 among software companies
› Grew 1,995% between 2010-2013
› Founders still own 80%+ of the company
Because of our close working relationship
with the investment team, and how well they
understand Salesforce’s AppExchange
Partners, the initial funding and follow-on
rounds have allowed us to bring in the
capital we need very efficiently.
It’s great to be able to focus on growing my
business rather than on looking for funding.
John Stewart, CEO Cloudbilt

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Blended Funding Path: Grow to a Better Valuation
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› Who: SaaS solution for mental health
professionals
› Funding: Initial Funding 2010 - $250,000
› Use of Funds: Increase engineering
capability, attain product certification,
sales and marketing
Today
› Millions in revenue
› Subsequently raised two rounds of equity
financing totaling: $14M (Lighter Capital
introduction)
› Increased revenues by >500%
› Grew from 10 to 60+ employees
“We had a responsible mix between equity
financing and revenue-based financing. I’m
glad we didn’t dilute more than we did.”
David Lischner, CEO Valant

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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
Rights)
Added Value Low / None Medium High
Dilution None / Low None High
Payment
Flexibility
Low:
Fixed Payments
Medium:
Variable Payments
High:
No Payments
Speed 4-8 months 4 weeks
Highly variable. Typical
3-9 months of focused
effort
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Funding Option Comparison

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1. Equity Valuation? What % to give up for the capital?
2. Control/Partnership Who makes key decisions?
3. Value-add More than just money? Accelerate value?
4. Risk Tolerance Personal assets?
5. Timeframe/Distractions How long will raising funds take?
6. Horizon Exit strategy? Build to exit? Build and hold?
7. Culture Is there alignment?
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Selecting a Funding Path

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Know Your Numbers
› Actual historical
› Projections & assumptions
› Key SaaS metrics
› Capitalization
Document Your Company
› Executive summary
› Investor deck
› Supporting slides / deep info
› Product demo
Get Ready for Funding – the Checklist
Take Action
› Activate your network
› Legal + accounting prep
› Keep momentum / sense of
urgency

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Financials
› MRR (Monthly Recurring
Revenue)
› Burn rate
› Zero cash date
Customer Metrics
› Acquisition costs: CAC, CAC
Ratio, CAC Payback
› Customer value: ACV, LTV
› Churn
Key SaaS Metrics to Focus on
Growth
› Monthly and annual revenue
growth rates
› MRR/ARR growth rate
› 40% rule: is your growth
outpacing your burn?
Market/White Space
› Market size / disruption
› Competitors

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Q&A
Want to Learn More about Lighter Capital?
Visit Our Website
www.lightercapital.com
Apply Online
www.lightercapital.com/apply
See If You Qualify
www.lightercapital.com/how-it-works/see-if-you-qualify