Lighter Capital, a provider of growth capital to tech startups, will begin offering debt financing, including term loans and lines of credit, in the Canadian market. The expansion of Lighter Capital’s debt financing business aims to provide Canadian entrepreneurs with an alternative to traditional equity sources such as venture capital or bank financing.
Lighter Capital provides founders up to $3 million of non-dilutive growth capital. Rather than take equity, the company takes a percentage of monthly revenues over the life of the loan. Unlike traditional funding sources, Lighter Capital doesn’t require board seats, warrants or personal guarantees from its borrowers. Since 2012, Lighter Capital has invested more than $200 million in more than 350 U.S.-based startup, including Jive Communications, MapAnything and Steelbrick, in more than 650 rounds of financing.
“There’s no question that debt is the most cost effective form of capital for early stage companies,” Thor Culverhouse, CEO of Lighter Capital, said. “Equity is comparatively very expensive, especially for early-stage entrepreneurs. What we’ve done is create a fast, easy way for revenue-generating startups to access financing without having to give up any equity or control.”
Lighter Capital is already in active discussions with Canadian startups and will open an office in Vancouver in April with a dedicated team focused on growing its presence in Canada. Lighter Capital also has partnered with the Canadian outpost of the Founder Institute, a startup accelerator, in order to provide startups with the advice and support needed to grow their companies.
“We have been fortunate to have mentored more than 200 tech CEOs and helped launch their companies,” Sunil Sharma, managing director of Techstars Toronto and chapter director of the Founder Institute Toronto, said. “With the arrival of Lighter Capital, we see an immediate alignment with the kind of tech startups that Canada has been producing with such success and we are excited to be working with them.”
Lighter Capital’s debt-based financing represents an alternative to venture capital financing for early stage startups post-seed that are trying to fund growth initiatives without dilution. Additionally, Lighter Capital’s funding can be used by startups that have already taken venture capital funding and are between rounds.
“With the Canadian tech industry’s continued growth, we’re seeing a correspondingly greater need among startups for access to venture capital as well as to various forms of debt financing,” Meredith Powell, Vancouver-based venture partner at Voyager Capital, an investor in Lighter Capital, said. “Lighter Capital is a trailblazer in the area of debt-based financing and I have little doubt that, given the increasing demand for their services, they’re positioned for success across the nation.”