Last Friday we announced a new $100 million fund with Community Investment Management (CIM), an impact investment firm focused on funding lenders that provide capital to small businesses. With this new fund we have raised the total amount of capital we can provide to each company from $1m to $2m.
None of this would be possible without great customers, employees and investors. Thanks to all of you for all your amazing contributions to Lighter Capital.
To our customers in particular, our funding model is predicated on sharing in your successes and failures, aligning our business with yours. So our success is literally due to your success!
More (and better) capital for more entrepreneurs
Lighter Capital was founded in order to help entrepreneurs into two fundamental ways.
To provide a better way for entrepreneurs to access growth capital than traditional equity or debt. Equity is highly dilutive, controlling and looking for 10x returns. Traditional debt providers aren’t aligned with the entrepreneur (e.g. the banks looking for safe, inflexible payments, while the entrepreneur is trying to grow a business).
To disrupt the process of raising capital. Raising money is a process ripe for technological innovation. It’s antiquated. It’s slow. It distracts entrepreneurs from what they should really be doing: building their businesses. In the ultimate irony, venture capital has funded tech companies to disrupt other industries, but the venture capital industry itself hasn’t undergone great technological innovation. In this era of big data and machine learning, when corporate data resides in the cloud and flows from application to application, it’s absurd that raising capital is still stuck in the days of pedigree, pattern recognition and PowerPoint. There’s a better way.
With this new capital, we’re ready to fund many more great tech companies. We estimate this $100m will enable us to fund 500 new investments.
I’m particularly happy about increasing the maximum amount of capital we can provide a company from $1m to $2m, because I know how hard it is to raise a couple million bucks. It’s perhaps the hardest amount of capital to raise; it’s too big for angels and too small for VCs. And yet $1-2m is often how much money lots of great companies need to grow. Having been an entrepreneur who spent too much time raising capital, as well as a VC who spent a lot of time looking for 10x investments, I know how necessary and difficult it is to raise this amount of capital.
Now we can do this, and do it quickly with technology. It’s what we call Capital-as-a-Service.
A commitment to entrepreneur-friendly funding
A big thank you to CIM. Their commitment is a great endorsement of our model and our mission to create an innovative funding model that directly aligns the interests of the entrepreneur and investor. CIM believes that thriving small businesses are critical to economic growth, job creation, and the health and sustainability of local communities. They work with partners to deliver responsible and transparent financing to small businesses. We look forward to a great partnership.
We also thank our equity investors Summit Capital and Voyager Capital, as well as our chairman Jeff Seely, who personally invested in this equity round. With these investments we will continue to develop our amazing software, scale and grow our team, enabling us to continually improve the way entrepreneurs access growth capital online.
Finally, I want to say thank you to everyone on the Lighter Capital team. We have doubled in size over the last year and we will easily do that again in 2016. Amazing software and technology is what will help us scale Lighter Capital, but it’s the team’s commitment to and belief in our mission to reshape the way small businesses access growth capital that will drive our success.