GrowthDebt is a new type of growth financing.. a blend between traditional bank debt and venture capital. GrowthDebt offers a flexible structure with variable payments that lets companies grow without having to dilute ownership.
GrowthDebt helps companies grow without diluting equity ownership.
 

Arctaris invests in healthy, growth-stage companies in broad range of industries:

  • Companies should have at least $5M in annual revenues.
  • Companies should be cash flow positive.
  • Companies may be public or privately held.
  • Companies with locations in underserved or rural markets are desirable but not mandatory.
  • A deal sponsor (e.g. PE Fund, pledge fund, or individual equity investors) is desirable but not mandatory.

Companies Enjoy:

  • No Dilution of Ownership- Royalties are used as an alternative to warrants or stock as with traditional subordinated debt.
  • No Pressure to Sell- There is no need to force an exit, as royalty securities are self-extinguishing.
  • Competitive Cost of Capital- Lower targeted return multiples in exchange for predictable income back to the fund.

Structure

Standard Loan Base:

  • Current coupon, paid monthly, with 5-year principal amortization
  • Senior secured or subordinate with UCC perfected lien
  • Low total leverage ratios of 1.0-2.5x

Royalty Enhancement:

  • Royalties pay a percentage of incremental sales
  • Royalties are secured by same lien as base loan
  • Inflation protection through sales peg

Company benefits:

  • Less or non-dilutive to founders, VCs, shareholders
  • Flexible/affordable obligation that matches company’s payments with revenue growth
  • Payments are tax deductible after repayment of principal
  • Transparent model –no hidden valuation formulas
  • No forced exit needed to satisfy Investors’ need for liquidity
  • Interests are aligned to grow the top-line revenue