Insight
Lagging revenue makes refinancing venture debt facilities difficult
“Anyone who's going to try to refinance you and help get you out of that position is oftentimes going to look at you on a, lever you on a revenue basis. So if you raised ten million bucks, but you only got, and you took three million, but you only got to two or…”
Insight
Owning 40% of a $50M exit often beats a diluted IPO
“If you're not able to do that, but you're able to sell it for fifty million, let's just say, and you own 40% of that, You probably made just as much or more money as you made if you were that public founder of that public company.”
Insight
LTV to CAC is unimportant for early underwriting because LTV is gameable
“LTV to CAC. Eh, not that important to us. LTV can be gamed. It's hard to know. Sometimes you don't have enough history or data.”
Assertion Not checkable as stated
Venture debt requires an equity round within the last two quarters
“If you're going to get ventured at, you probably have to have raised around within the last quarter or two.”
Assertion Supported
The median M&A valuation for software companies is roughly $70 million
“If you look at the median M and a valuation for Software companies, it's, I think the last day, it's a seventy million, right?”
Insight
Net retention can mask churn, making gross retention an essential metric
“And frankly, we think retention can be masked for retention or can be masked on a net basis. So it's really important that we look at it on a gross basis.”
Disclosure
Bigfoot Capital has never taken an equity warrant in its lending
“And we don't take any of the upside. We've never taken a warrant. We get paid interest and we in turn pay interest basically to two people.”
Prediction Not checkable as stated
The Fed will likely only cut rates by 75 basis points
“There is not some rapid reduction in interest rates that's magically happening. We could be sitting here this time next year, we've come down 75 basis points. We haven't come down 300.”
Prediction Not checkable as stated
Growth will not get easier for the typical software company anytime soon
“I don't personally. For see an environment where growth gets easier for the standard software company.”
Insight
Venture debt facilities typically size at 25% to 33% of equity rounds
“And it's worth noting that the way they size kind of their facilities is as basically a percentage of the equity round. Again, back to 10, three, they may lend you a third, 25% to a third of your
Equity round.”
Disclosure
Bigfoot Capital lends 25% to 50% of ARR with a $2M minimum
“Whereas what we are is the way we think of ourselves, ARR lender, annual recurring revenue. So we're really looking at your revenue again, minimum of two million. And we're going to say, Hey, we're going to lend you some percentage of that, which may be 25 to …”
Assertion Not checkable as stated
People account for roughly 70% of a small software startup's costs
“I think in our, what we see is kind of 70% of the cost structure is people.”
Disclosure
Bigfoot Capital targets 1.5x returns over three years with mid-to-upper teen rates
“Then we're going to be Mid upper teens interest rate, but to step back and say, oh, okay, I understand Bigfoot that you're trying to make one and a half X on your money over three years.”
