Seattle’s Lighter Capital is making it easier for startups to raise cash without partnering with venture capital firms or angel investors.
The company launched two new products Tuesday: a revolving working capital line, and a term loan offering.
Founded in 2010, Lighter Capital has built its business on providing early-stage startups with an online revenue-based funding alternative that does not require board seats or forfeiting of equity. Startups agree to share a percentage of future revenue with Lighter Capital; loan payments are tied to monthly revenue. Using proprietary technology to guide investments, it has invested $150 million-plus in more than 300 companies.
Now the firm is expanding with the lines of credit and term loans.
Startups historically have had trouble qualifying for loans before their Series A round, said Lighter Capital CEO BJ Lackland.
“Evaluating small startups and providing small loans requires a sophisticated technology platform and data science,” he said. “Our fintech lending platform pulls in 6,500 data points through APIs, creates projections that are 97 percent accurate on average, and automates much of the funding process.”
With the two new products, Lighter Capital aims to provide startups up to $3 million throughout their life cycle.
The firm recently released its own report that shows how revenue-based financing has become the “most popular form of alternative startup financing in recent years.” It is growing at a time when some are encouraging entrepreneurs to seek alternative forms of investment.
This past January, Lighter Capital announced a partnership with Silicon Valley Bank to give entrepreneurs a way to raise non-dilutive capital and get banking services in one online hub.
Lighter Capital raised a $100 million fund in 2015. Its investors include Voyager Capital, Founders Co-op, Summit Capital, and Community Investment Management.