Case Study: Creating Optionality. Extending Runway.
Creating Optionality Through a Competitive Financing Process
Runway Extension: Needed capital to extend operating runway by 12 months.
Ownership Preservation: Required a capital strategy that extended runway while preserving shareholder ownership.
Business Overview
Company Profile: Series A-backed startup.
Current Scale: $2M ARR.
Team Size: <30 employees.
Client Challenge
- Misaligned Financing Alternatives: Other financing avenues evaluated were not timely and misaligned with company goals.
- Lack of Market Competition: Approaching a single financing source limits leverage and risks suboptimal loan terms.
Finity Solution
- Capital Requirements Assessment: Modeled the company's pipeline, customers, headcount, and planned initiatives to determine total capital required.
- Strategy Selection: Evaluated equity versus debt financing, determining that external debt financing offered the strongest strategy to extend runway without giving up equity.
- Broad Market Outreach: Reached out to 35 external lenders to build a broad market, create competition, and compare structures.
- Diligence Execution: Managed 11 NDAs and discoveries alongside deep-dive financial reviews and operational diligence.
- Term Sheet Competition: Secured 4 competitive term sheets to generate negotiating leverage.
- Structure Selection: Evaluated revolving lines of credit against term loans, selecting a term loan to lock in a lump-sum upfront injection with predictable, fixed amortization.