The Past Few Years Have Been a Rollercoaster When It Comes to Equity-Based Investment
While equity-based firms pressed forward with fundraising, much of that capital has remained undeployed over recent years in the midst of global financial pressures, high rates, and other concerns. However, firms in 2024 appear to be moving in a new direction: April 2024 saw the first decline in dry powder since December 2014, indicating that opportunities may be outpacing fundraising.
If your SaaS business is considering this avenue as part of your growth strategy, it’s important to carefully evaluate your sources of equity financing. While the information above is reflective of the global equity industry, every firm is different and has its own investment strategy and industry specializations. Here, we’ll explore a few key considerations when you’re evaluating sources of equity financing.
- Just launched: Explore the TruWest Fund I, our equity fund that continues the momentum created via our venture debt solutions.
Key Considerations for Evaluating Sources of Equity Financing
1. Do they focus on SaaS and/or technology?
This should go without saying, but it’s important to work with equity funding partners that have deep market experience in SaaS and technology. The synergistic boost that you’ll receive in working with firms that understand the challenges, nuances, needs, and daily operations of a scaling SaaS company will be virtually endless. Look beyond whether the company simply lists technology or SaaS among their focus verticals — consider companies in their portfolio now, or that have already exited. How deeply ingrained is technology in their philosophy, founder history, and insights?
2. Will they work with where you’re at now?
It’s likely that as you explore sources of equity financing, you may not meet your preferred provider’s criteria — at least not yet. What happens next will tell you a great deal about what your future relationship with that company will look like: will they remain in touch with you and advise/guide you toward readiness, or will they say ‘thanks, take care’ and move on? An ideal source of equity financing will work with you and stay close as you make progress on your growth goals until the time to partner arrives.
3. Do they have flexible solutions available?
Equity funding has its strategic, valuable uses, but what if you decide or discover that equity isn’t actually right for you right now? What happens then? Do you just move on to another company? Do you try to work with a bank? Do you seek out an angel investor? Ideally, a partnership-focused equity firm will also offer solutions that enable you to keep moving forward toward growth until you’re ready for equity.
4. Will they support you along your journey?
This is perhaps the most important must-have in this list. Any equity funding firm can give you capital to use for your respective purposes, but not every firm will walk beside you along your growth journey. Equity-based firms are known for their partnership, introductions, industry insights, and more. Make sure you get that value from the partner you decide to work with — it will make a significant impact on the outcome.
Get the Right Capital for Where You’re at Now — and More
With a legacy rooted venture debt financing, River SaaS Capital understands what growing and scaling technology companies need in order to more swiftly achieve their growth goals. That’s why we also offer equity funding in addition to our venture debt financing solutions. Most often, our portfolio companies utilize venture debt first to achieve a target level of growth, which is then supported and broadened by an equity investment.
We work specifically with SaaS companies in the US with an ARR of $1.5 million or greater for an initial investment. However, if your company is not at that revenue level, we will stay in touch with you until you are — keeping you informed and helping you prepare. If you are first seeking equity investment but do not yet meet our criteria, it may be worth utilizing our venture debt funding solution first. Many of our portfolio companies have done this with great success. And along the way, our team will support your success — from day one and every day thereafter. Learn more about how we partner with companies in our case studies.
When you’re ready, fill out the form below to connect with our investment team. We look forward to learning more about you and how we can help you achieve your goals.
