If you are a middle-market company looking for capital, here’s the news: banks want ideal debt deals (hello, tightening standards) right now, while equity raises are… slow, to say the least.
So, what’s a C-suite exec or finance professional to do? Make sure you’re tapping the whole market, not boxing yourself into just one side or the other.
Below, we outline how to break down that capital raise—and how to secure it at better rates and more efficiently, to boot.
1. Looking at a debt raise? Tap the non-bank private market
If traditional banks aren’t biting on your debt raise, it might be because your numbers are pristine for your stage and industry—but not for their overarching risk profile.
Software/SaaS companies are a case in point: banks looking for the ‘right’ deal are looking for double-digit ARR growth rates, 85% gross margins, and retention rates in the upper 90%+.
…Which isn’t realistic for most SaaS companies (VC-backed AI companies are our exception).
Now consider this: the private lending market has grown considerably, and will continue to do so. In five years, the global private debt market is expected to reach a value of $3.5 trillion in AUM.
So the market is certainly there. But private lenders can be hard to reach and are inundated as it is.
How do you match your company’s niche, pitch, and capital needs to the right lender? Find a platform or service that will match your capital-raising needs with your unique profile. Sure, there are debt consultants. But why spend the money and time when there are platforms like CAPX that connect mid-market companies to private lenders directly, and help with terms and pricing, at lower rates. Think of this almost like a dating platform, but for corporate debt.
2. Reach a broader base of traditional (bank) lenders
The more choice you have when obtaining debt capital, the better for your company. That means that going past your tried-and-true book of contacts and reaching the national market of lenders (really large banks you know and large banks you don’t know) may be ideal for your case.
Again, utilizing a platform or service that can help you game out which type of lender, where, and who, will help you get to someone who specializes in your sector or sees opportunity in your pitch—even if they are based in another region.
The bonus? That broader reach can ultimately lower your overall cost of capital and improve your negotiating position.
Think of it this way: You’ll be in a better place to negotiate a deal that works for your company with multiple term sheets in hand rather than just one or two.
3. Streamline the lending process
And then there’s the logistics of it all: how efficient can you really be if you are going out and pitching lender after lender?
Platforms like CAPX can make the process much more efficient: with a single click, you can connect to multiple lenders and receive term sheets within a few days.
You’ll need to invest a little time up front answering questions we know you’ll get down the road (but hey—you just benefited from our deep expertise), but after that, the process is streamlined, secure, and confidential.
Tapping into the national market, connecting to private lenders and expanding your options all work together to reduce your execution risk and make it more likely that the deal will close. If one lender doesn’t work out, you’ll have others to fall back on.
CAPX increases your capital options and the probability of a successful execution. Get in touch today to learn more about how we can help your company meet its capital needs.
