Sage Growth Capital, a leader in industry agnostic revenue-based investing, announces the successful close of its second fund. A revenue-based investment is one where investors inject capital into a company in exchange for regular payments based on a percentage of the company’s sales until a pre-negotiated amount has been repaid. This funding does not dilute the ownership of founders and early investors, and unlike most debt financing there are no personal guarantees, liens or collateral required. Sage Growth Capital’s funding option is attractive for growing companies who have sales and gross margin but are not ready for or wish to pursue traditional equity or lending models.
Sage Growth Capital was started in 2019 by seasoned angel investors and capital entrepreneurs Denise Dunlap and Kevin Learned, along with their partner Molly Otter, who has an extensive background in private equity and debt. Their mission was to provide an additional funding option to companies who were underserved by traditional capital markets based on their geography or industry. Managing Partner Denise Dunlap says: “We started Fund I to provide a different option for companies who were seeking growth capital, and we wanted to prove that revenue-based investments could work outside of SaaS or tech businesses. That experiment was a success! We raised Fund II as a way to keep that success going, to provide even more companies with the funding they need to grow, and to increase the check sizes we are able to write.”
Fund I had total capital of $2,115,000 from 37 investors. Nine investments were made in seven companies before the last of the funds were invested in February of 2022.
On June 30, 2022, Fund II closed with total capital of $7,757,750 from 87 investors. The Fund has made four investments: UnityLab, Naked Sports, CyberReef Solutions, and Mign. More information is available on each of the portfolio companies on Sage’s website at: www.sagegrowthcapital.com/portfolio. Managing Partner Denise Dunlap says, “We are pleased to partner with so many of our angel colleagues across the U.S. to continue this investment strategy that helps both investors and entrepreneurs. We are happy to be done with fundraising and are eager to put the money to work!"
Sage Growth Capital has investors in 22 states:
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Sage Growth Capital’s unique approach to investing in companies that don’t fit traditional equity or lending models
Our fund makes revenue-based investments in growing companies with stable gross margins of 40% +, a minimum of $300,000 in trailing twelve-month revenues, and “recurring-like” revenue streams. We will invest up to one-third of that revenue for companies who qualify.
Our financing structure is similar to a loan, but unlike traditional loans, there is no fixed payment or stated interest rate. Rather, the company agrees to pay us a percentage of revenues each month until our investment plus a pre-negotiated return has been paid.
For example, we might make an investment of $100,000. In exchange, the company agrees to pay us 5% of revenue until it has paid us back $250,000, usually over a time period of 3-5 years. The amount of the investment, the percentage of revenue, and the amount paid back are just examples as we underwrite each investment based upon the needs and risk profile of the company.
The advantages of Sage Growth Capital’s revenue-based capital are:
1. It is non-dilutive. We take no ownership interest away from founders or early investors.
2. Payments vary with revenue. This means in low sales months, your payment is low. Conversely, in high sales months when you can afford to do so, your payment is higher.
3. Our investments are not collateralized, nor do we require personal guarantees.
For more information on our criteria for funding, visit our website here: https://www.sagegrowthcapital.com/funding.
If you think revenue-based capital might be appropriate for your business, we want to hear from you! The easiest way to start a conversation is to submit our simple application found at www.sagegrowthcapital.com/apply-now. And of course, if you know of any companies who might be a good fit for our funding, we love referrals!