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Steve LeFavour
Overview
44%, that’s the average equity position our client has achieved in their customers by trading software for equity.
Seeking $21 million in debt to finish the capital stack on a $31 million acquisition of a tech company with $5 million EBITDA.
Our client’s OS is a software platform that provides automation in the five major business areas (marketing, sales, human resources, operations and finance) in exchange for equity in their client – a unique business model dubbed “Tech for Equity”.
No capital invested – instead, they create code for their client companies.
No incremental development costs. The founder has invested $8 million of his own capital to develop the software.
Superlative track record and growth
- 35 equity deals currently. On track for 50 this year and 60 more next year
- Average equity position of 44% – double the venture capital industry average
- Latest valuation of their first 19 investments is $80 million
- Client size – 38% startups, 17% SMB, 46% enterprise
Growth through acquisition
- Targeting complimentary software companies to acquire
Extraordinary leadership team
- Led by former CEO’s, fund managers and founders with over 80 exits
How Far Behind Are You?
We could have people living on Mars within the next 10 to 15 years… and you still haven’t automated your H.R. system?
It’s time to start thinking bigger!
Opportunity
Our client operates simultaneously in the rapidly growing business analytics software and the venture capital spaces. Management believes that both spaces are poised to continue their rapid growth for the foreseeable future.
Revenue for the Business Analytics and Enterprise Software Publishing industry is expected to increase, rising at an annualized rate of 5.1% to $106.1 billion in 2025. Historical strong revenue growth has been driven by several underlying demand conditions, such as rising corporate profit levels and new market opportunities to expand software offerings on to mobile and cloud platforms.
Over the five years to 2025, revenue for the Private Equity, Hedge Funds and Investment Vehicles industry is forecast to grow an annualized 5.4% to $259.0 increased demand from institutional investors and an upswing in the private equity market.
Solution & Strategy
Our client is solving how companies lagging in technology get more out of their company by adopting next generation technology.
The Tech for Equity model allows our client to participate in the full upside of the client company, while minimizing the investment downside to customer acquisition and prorated software development costs.
Additionally, revenue is generated through software consulting fees.
Our client’s proprietary software provides a multi-location intranet that has over 25 other business optimization tools to help companies transform their systems and processes with the right tools so they can drive growth.
This unique first-ever business model and I.P. stack helps companies:
- lower operational expenses and simultaneously increase revenue, while increasing their valuation
- increase scalability, transferability and enterprise value
- changes how technology is used as a direct catalyst for the three levers that influence enterprise value – revenue, earnings and valuation multiples
