Seattle-based Lighter Capital, which offers startups an alternative to venture capital and traditional bank loans, today announced a new partnership with Silicon Valley Bank. The deal gives entrepreneurs a way to raise non-dilutive capital and get banking services in one online hub.
Lighter Capital has similar partnerships with companies such as Salesforce and Intuit, but BJ Lackland, the company’s CEO, said the deal with Silicon Valley Bank is different.
“It’s much broader and has a much deeper technical integration and product offering to really satisfy a startup’s needs on a more complete basis,” Lackland said.
Lighter Capital offers young startups an online revenue-based funding alternative to angel investors or venture capital firms that does not require board seats or forfeiting of equity. It uses proprietary technology to figure out which companies to back and provides $50,000 to $3 million per company. Startups agree to share a percentage of future revenue with Lighter Capital; loan payments are tied to monthly revenue.
Lighter Capital has invested in more than 300 companies across 500 deals and plans to invest in close to 200 startups this year, Lackland said. The firm is growing at a time when many are encouraging entrepreneurs to seek alternative forms of investment.
“Raising money is a very manual process that is time-consuming,” Lackland said. “And a lot of companies aren’t the greatest fit for equity, yet still have a great story to go out and grow or they need a shot in the arm to grow and maybe raise equity later.”
Peter Wannemacher, a principal analyst at Forrester Research, said the market is hungry for alternative sources of funding.
“It is decidedly distinct from small business lending marketplaces, which will likely benefit all parties since our research shows a need for different types of loans, credit, and capital for startups and small businesses,” he said of the partnership.
John Willard, managing director of digital partnerships at Silicon Valley Bank, said the partnership was primarily about client acquisition, giving the bank another way to find up-and-coming startups. In addition to banking services for startups, Silicon Valley Bank also offers its own venture debt and growth capital services.
Lighter Capital raised a $100 million fund in 2015. Its investors include Voyager Capital, Founders Co-op, Summit Capital, and Community Investment Management.
“From our initial investment, we recognized the leverage that Lighter Capital could provide a banking leader like SVB in providing entrepreneurs with financing alternatives to traditional venture capital,” said Voyager Capital Managing Director Erik Benson. “We are extremely excited by the opportunity this partnership provides the company.”