Blending Lighter Capital and VC funding for astounding, sustained growth
A mix of revenue-based financing and VC helped Valant Medical Solutions vault to the forefront of the behavioral healthcare market.
Recent VC Funding:
Recent Lighter Capital Funding:
Looking for competitive advantage in a growing market
When President Obama’s 2009 economic stimulus bill set aside $19 billion for healthcare technology and electronic health records, David Lischner, CEO of Valant Medical Solutions, saw an opportunity. “The market was going to move faster,” Lischner says, “and we wanted to make sure we could stay ahead and grow with the market—or ahead of it.”
Lischner had founded Valant in 2005 to help streamline healthcare paperwork and provide a platform that would allow caregivers to focus less on red tape and more on patient care. Now they needed capital to build out their engineering capacity, certify their product, and invest in marketing and sales in order to earn a greater market share.
They settled on a mix of debt and VC funding that would help them take their suddenly expanding market.
Choosing revenue-based financing
Revenue-based financing turned out to be a natural fit with Valant’s growth strategy. “In late 2010, we had close to $1 million in revenues,” Lischner says. “Back then, our cash flow was more choppy and unpredictable, and I liked that the amount you pay Lighter Capital each month scales with your success. Your payment goes up or down depending on how much cash you are bringing in, which makes it a lower risk than traditional debt.”
Lischner also appreciated the availability of follow-on rounds. “We were used to bootstrapping, and I liked that this type of financing would allow us to bootstrap our way out of any difficulty. If we had done normal debt with a fixed repayment amount, financing would have been more risky. As it turns out, we did pretty well and our revenues kept growing, but it was good to have that security.”
Ease and expertise
“From when we agreed on terms to closing was rapid and smooth,” Lischner says of his experience with Lighter Capital. “The whole process of borrowing from Lighter Capital was fast, hassle-free, and efficient—and definitely faster than equity financing.”
Lischner also looked to Lighter Capital to help facilitate venture fundraising. “From the beginning our relationship was great,” Lischner says. “Andy Sack, the founder of Lighter Capital, supported us along the way. CEO BJ Lackland also made great contributions beyond the money.”
Lighter Capital also introduced Lischner to the Seattle-area VC that facilitated their next round of funding.
Growing fast to take the market
One year after financing, Valant had doubled their revenues and customer base. Three years later, they had increased revenues by 500%. “We grew from about 10 employees to 60,” Lischner says. “At the time, we were emerging. Now we’re the market leader. We’re on our way to becoming a $100 million company in the next four to five years.”
That growth helped them close $11M in private equity investment in 2014 to enable their expansion in the behavioral health segment, and broaden its EHR and electronic billing capabilities. They raised an additional $3M in VC in 2015.
Valant is a SaaS organization serving the needs of the behavioral healthcare industry.
“Relationships do matter. You don’t always understand this when you just look at deal terms, but the quality of people you work with matters a lot. The people at Lighter Capital have been a great sounding board when we were formulating our financing strategy.”
David Lischner, CEO Valant