HOW CAN GOLUB CAPITAL LATE STAGE LENDING HELP YOUR SAAS BUSINESS GROW?

Golub Capital’s Late Stage Lending offers flexible debt to venture-backed, growth equity and other technology companies. Our solutions are customized to meet the growth thesis of your company without extensive equity dilution.

Check out our brief educational videos and email us if you’d like to learn how we can partner together: lsl@golubcapital.com.

LSL Educational Videos:

Are you seeking debt financing to help grow your business? Watch the video below to learn how a single lender, versus two, can simplify your life.

Ready to learn more about the nuances of loans, especially loan covenants? Watch the video below to learn more about how they work and why “no covenant” deals often come with “hidden covenants” that can take you by surprise and slow down your growth. Bonus: Download our whitepaper at the end of the video for further insights:

How does our LSL product work to help meet your growth goals? It only takes a minute to find out by clicking on the video below:

 

Email us at lsl@golubcapital.com for more information.

Golub capital’s late stage lending offers flexible debt to venture-backed, growth equity and other technology companies.

Golub Capital’s Late Stage Lending business provides financing solutions to venture-backed, growth equity and other technology companies. Our solutions are customized to meet the growth thesis without extensive equity dilution. We provide senior debt, subordinated debt and equity investments to companies undergoing rapid growth due to new services, increased adoption and/or entry into new markets. Our firm usually underwrites and holds the entire credit facility.

TARGET COMPANY CHARACTERISTICS

  • Expanding revenues with minimum recurring or durable revenue of $10 million
  • Current earnings may be reduced or negative due to continued reinvestment in growth
  • Backed by growth equity or venture capital firms
  • Strong customer revenue retention rates
  • Diversified customer base

TERMS OF FINANCING

  • Facilities from $10 million to $200 million
  • Customized and flexible covenant packages
  • Golub Capital will typically hold 100% of the credit facility

TECHNOLOGY LENDING LANDSCAPE

lsl-technology-lending-landscape_footnotes
ENLARGE IMAGE FOR IMPORTANT DISCLAIMERS

TYPICAL USE OF CAPITAL

  • Accelerated growth
  • Strategic acquisitions
  • Product expansion
  • Investor liquidity
  • Conversion to SaaS

SECTOR EXPERIENCE

  • Enterprise software
  • Application software
  • FinTech
  • Healthcare IT
  • Data analytics
  • Security
  • Mobile
  • Cloud

contact us

For more information on Golub Capital Late Stage Lending please contact Andrew Steuerman or Peter Fair.

Golub Capital’s Late Stage Lending group provided a compelling debt financing that allowed the company to accelerate its growth without meaningful dilution to current stakeholders. The Golub Capital team has significant expertise working with the needs of rapidly growing and expanding SaaS companies, making them excellent partners. Their debt solution is unique as it has a long-term horizon, allows us the flexibility to invest in the business and has greater scale than any other debt product in the market.
Ian Charles, CFO
Host Analytics

SaaSMeter

Golub Capital Quarterly SaaS Valuation & Investment Trends Report

Welcome to Golub Capital’s SaaS Meter, a report that analyzes valuation and investment trends for SaaS companies. The SaaS Meter leverages data from:

–The Golub Capital Public SaaS Tracker (“GC Public SaaS Tracker”), which comprises publicly traded SaaS companies that are listed on the NYSE and Nasdaq

–The Golub Capital Private SaaS Tracker (“GC Private SaaS Tracker”), which comprises private SaaS companies that are included in the “Golub Capital Altman Index”

For full definition of the Trackers, please refer to SaaS Meter Definitions at the end of this report.

Quick Meter Reading

SaaS Multiples Soar
The fastest growing public SaaS companies reached revenue multiples of over 25x

Massachusetts in Top 3
Massachusetts surpassed Texas in venture-backed SaaS deals, rising to third place among U.S. states

Shifts in Series C
Fewer series C rounds were funded in Q2 2019 than in Q1 2019, dropping over 7%; however, average C round fundings grew from $32.5 million to over $46 million

Source: CaplQ, PitchBook, Golub Capital

Q2 2019 Venture-Backed SaaS Transaction Breakdown & Average Fundraising Amount

States with Highest Percentage of Venture-Backed SaaS Deals in Q2 2019

Weighted1 Average Revenue Multiple

GC Public SaaS Tracker Price Movement vs. S&P 500 Price Movement

Average LTM Revenue Multiple of LTM Growth Rates (%)1

Average LTM Revenue Multiple of LTM Gross Profit1

Weighted Average LTM Revenue Multiple

GC Public SaaS Tracker Weighted Average Revenue Multiple – LTM vs. FWD1

GC Public SaaS Tracker Average Sales & Marketing Expenditure (%) vs. LTM Revenue Multiple1

GC Public SaaS Tracker Average R&D Expenditure (%) vs. LTM Revenue Multiple1

Q2 2019 Public SaaS Tracker Companies1 Sorted by Market Cap

1. The SaaS Trackers described or illustrated herein are not actively managed or available for investment. The Public and Private SaaS Trackers are for illustrative and discussion purposes only and any information pertaining to these trackers should not be construed as investment advice. Companies are added to the tracker in the quarter of their initial public offering and are removed when they are no longer publicly traded, when subscription based software is no longer their primary product or primary source of YTD revenue or when information on their revenue sourcing is not available or reliable due to extraneous circumstances (inability of company to file, etc.).

Please refer to Important Disclosures at the end of this report for more information on methodology.

All data as of 6.30.19.

 

SaaS Meter Definitions

The Golub Capital Public SaaS Tracker (“GC Public SaaS Tracker”) comprises publicly traded SaaS companies that are listed on the NYSE and Nasdaq. Golub Capital defines Software as a Service (SaaS) companies as software companies that show a year-to-date (YTD) share of revenue above 51% being sourced from subscriptions and subscription related services. Such companies are added to the tracker in the quarter of their initial public offering and are removed when they are no longer publicly traded, when subscription based software is no longer their primary product or primary source of YTD revenue or when information on their revenue sourcing is not available or reliable due to extraneous circumstances (inability of company to file, etc.). The GC Public SaaS Tracker is updated on a quarterly basis and is not actively managed or available for direct investment. The GC Public SaaS Tracker and companies therein are provided for informational purposes only and are not intended as investment advice or recommendations of any kind. The GC Public SaaS Tracker should not be relied upon in making any investment or business decisions. All data included is public information.

The Golub Capital Private SaaS Tracker (“GC Private SaaS Tracker”) comprises private SaaS companies that are included in the “Golub Capital Altman Index.” Golub Capital defines Software as a Service (SaaS) companies based on their revenue model and product/service. These companies are typically subscription-based software companies, used by enterprises for functions such as analytics, workflow and data collection.

PitchBook defines Software as a Service (SaaS) as “Information technology companies which provide their software using client-server architectures that host the application in a centralized, off-site location.”

The GC SaaS Trackers described or illustrated herein are not actively managed or available for investment. The Public and Private Saas Trackers are for illustrative and discussion purposes only, and therefore, any information pertaining to these trackers should not be misconstrued as investment advice. Trackers are shown for illustrative purposes only and are intended to provide general market data as a demonstration of current trends. Trackers should not be construed as investment advice and are not available for direct investment. No representation is made that any tracker is an appropriate measure for comparison or predictive of market trends. Golub Capital does not verify the accuracy or completeness of third party data used in this report and Golub Capital is not responsible or liable for any such content that may be inaccurate or incomplete. Third party data is provided for informational purposes only.


Important Disclosures

Golub Capital (including its various affiliates) creates and manages multiple investment funds. GC Advisors LLC (“GC Advisors”) and GC OPAL Advisors (“GC OPAL Advisors”, and together with GC Advisors, the “Registered Advisers”) are investment advisers registered with the United States Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940. A number of other investment advisers, such as GC Investment Management LLC (“GC Investment Management”), GC Synexus Advisors, LLC and OPAL BSL LLC (Management Series) (collectively, the “Relying Advisers”) are registered in reliance upon GC OPAL Advisors’ registration. The Registered Advisers and the Relying Advisers (collectively, the “Advisers”) manage certain of Golub Capital’s affiliated funds and accounts. For a detailed description of the Advisers and each of their investment advisory fees, please see the Registered Advisers’ Form ADV Part 1 and 2A on file with the SEC. The beneficial owners of Golub Capital are also the beneficial owners of the Advisers. Certain references to Golub Capital relating to its private fund business may include activities other than the activities of the Advisers, or may include the activities of other Golub Capital affiliates in addition to the activities of the Advisers.

No equity, debt or capital is being offered by means of these materials. These materials are for informational purposes only and are not an offer or solicitation to buy or sell any securities, make an investment, or participate in any loans. You should not rely on these materials in making any business decisions and these materials are not intended and should not be construed as investment advice. The information contained herein is preliminary and subject to change. While information herein has been obtained from sources believed to be reliable, no representation is made as to its completeness and accuracy.

Past performance does not guarantee future results. Certain statements herein constitute forward-looking statements, which relate to future events, future performance or financial condition, and are subject to change for any reason.

Golub Capital investments are valued at each quarter-end at their fair value consistent with ASC Topic 820 and Golub Capital’s valuation policies and procedures. The current fair value of outstanding portfolio loans or other investments that are not actively traded is determined by the valuation policies and procedures the Advisers, which are summarized in the Registered Advisers’ Form ADV Part 2A.

This material contains proprietary information, and the distribution of any of the contents herein to any other person without the prior written consent of Golub Capital is strictly prohibited.


About Golub Capital Late Stage Lending

Golub Capital is a market-leading, award-winning direct lender and credit asset manager, with over $30 billion of capital under management. Our Late Stage Lending group offers growth debt opportunities to venture-backed, late stage SaaS companies. The firm’s flexible credit solutions offer entrepreneurs and executives the opportunity to finance their future without diluting their ownership. The firm structures offerings to foster long-term partnerships, encouraging portfolio companies to take control of their growth, make strategic acquisitions and expand their product offerings.

Across our activities, Golub Capital nurtures long-term, win-win partnerships that inspire repeat business from our private equity sponsor clients and investors. Founded 25 years ago, Golub Capital today has over 425 employees and lending offices in Chicago, New York and San Francisco. For more information, please visit golubcapital.com.

SaaSTalk

A conversation with Digital Guardian and Golub Capital

Mordecai (Mo) Rosen
CEO
Digital Guardian
Mo has more than 25 years of experience in the technology industry, including four years at CA Technologies (now a Broadcom company), where he served as the General Manager for the Cybersecurity Business Unit, following the acquisition of Xceedium, where he was the Chief Operating Officer. Mo shares his expert insights based on many years of enterprise cybersecurity experience and his deep comprehension of managed security and SaaS.

Mo has more than 25 years of experience in the technology industry, including four years at CA Technologies (now a Broadcom company), where he served as the General Manager for the Cybersecurity Business Unit, following the acquisition of Xceedium, where he was the Chief Operating Officer. Mo shares his expert insights based on many years of enterprise cybersecurity experience and his deep comprehension of managed security and SaaS.

Digital Guardian is the leading provider of data loss protection and one of the first to unify data protection (DLP) and endpoint detection and response (EDR) to safeguard against all potential data threats. In this edition of SaaS Talk, Golub Capital Senior Director Rob Sverbilov spoke with Digital Guardian CEO Mo Rosen to discuss the SaaS model for security protection, and to share thoughts on the future of the industry.

Rob: Give us a high-level background of Digital Guardian, what are the core services and products that you focus on?

Mo: Digital Guardian is in the business of protecting valuable and sensitive corporate data. Our products are used by companies that understand that data is now your core intellectual property asset.

Digital Guardian provides two ways of protecting the data. First is the cloud-delivered data loss prevention (DLP) service, which prevents sensitive data from leaving an organization, whether it’s from purposeful theft or accidental loss. Second is endpoint detection and response (EDR). EDR monitors the infrastructure the data sits on: your laptop, your server. It detects anything that would suggest that an external adversary has compromised the system, either directly or by masquerading as an insider with stolen credentials.

The unique thing about Digital Guardian is the combination of DLP and EDR in a single agent and platform that protects data across all major operating systems: Windows, Linux and macOS. We offer this via SaaS, and as a fully managed security program. For our Managed Security Program, we actually do the work for the entire management, administration and configuration for those customers who can’t hire enough security talent to do the management themselves.

Rob: What emerging technologies have you seen coming up in the security SaaS space?

Mo: I would say it’s the shift from the enterprise and appliance-level security that we, as an industry, have been delivering for the last 25 years, to security as a service. This is the direction that Digital Guardian is going, which is data protection as a service.

In terms of other disruptive forces, identity as a service is an example, with the IPO of Okta and the acquisition of Duo by Cisco.

The other is application security as a service. Millions of application services get introduced every year, and it’s about building security into applications from the get-go, and application security testing. The last thing I would say is to pay attention to what the major platform vendors are doing, from Microsoft to AWS to Google to Apple, they’ve woken up to security in a big way. They know that to take the arguments off the table about a shift to cloud, or a shift to SaaS, they have to embed security into everything, and they’re doing it.

Rob: You’ve been in the technology business for a long time. What has been your biggest takeaway?

Mo: I have three major takeaways. Number one: great tech companies build great products that customers want to buy. No matter how great your technology is, or forward-thinking it is, unless you find that product/market fit, it’s hard to build a great company. Especially in the SaaS world, it’s the products that lead.

My number two: great people and great culture are the most important things when building successful tech companies. You have to invest in people and understand the value of culture, and the rest will follow from there.

My number three: companies today really have to be agile, and you have to build a company that’s built to change. The concept of being built to last – it doesn’t last anymore. An entire company has to be agile from product, to go-to-market, to sales. You have to be able to adjust and run.

Rob: What do you think drives a lot of the corporate data breaches we’ve been seeing? What’s been the differentiating factor between companies?

Mo: There is a subset of companies where security is considered a checkbox, and those companies are the ones that are the most vulnerable. They don’t patch vulnerabilities. They don’t manage open source code. They don’t test applications. They don’t have a culture of security or governance.

Then there is the other set of companies that really believe security is critical. They embed security as part of the culture, and it gets pushed down from the CEO and the Board. Those are the companies that really understand the extent of security and security protection.

I also think security is now evolving to be looked at as risk management. You’re not going to be able to protect everything, but make sure you protect the important stuff. You start with recognizing it as a risk, and then you adopt a framework, and then put governance and process into place.

It can be hard for Chief Security Officers to communicate with others because they are still tech-talking guys, and security can feel like a different mindset – but risk, that’s a language everyone understands.

Rob: From your product standpoint, if I’m a user, can you describe the difference between a user who is just using the platform versus having Digital Guardian providing the platform and doing the monitoring? What are the benefits of each one?

Mo: The SaaS platform itself provides all the functionality. Just like a lot of SaaS platforms, there’s a little bit of software you have to install in your endpoints, but all the management is done in the cloud via SaaS.

You have to know what data you want to protect. You have to know where you want to protect it from going and then you write the rules and policies to do that exact thing. The construction and maintaining of those rules require people who know a lot about security, about the organization and about data exfiltration. Some big organizations have that capability in house, and they can leverage our SaaS product and manage. For those folks who don’t have giant security organizations with that level of sophisticated talent, they’d rather consume it as a managed service.

Rob: From your standpoint, as you’re trying to protect the core IP within the organization, how does the movement to the cloud platform affect your business and affect security as a whole?

Mo: It’s made it more complicated because data and operations live in multiple places now. They used to just live behind the firewall, but there is now a new digital supply chain. So, the problem here is that the data moves everywhere, it doesn’t necessarily have to do with cloud or SaaS, it has to do with governance.

Rob: Give us your take on where you think SaaS or specifically security SaaS is going within the next 24 months.

Mo: I don’t think we will see significant disruption within the next two years. It will really be about perfecting what we currently have. You’ll see additional capabilities being added through artificial intelligence and machine learning. That’ll increase our ability to identify breaches; it will increase our ability to find sensitive data, to track it, to classify it, to automatically generate rules to protect it, and to determine what baseline behavior is and what anomalous behavior is.

The other big thing that will happen over the next two years, is additional security capabilities being added by the major platform vendors. We at Digital Guardian have to play in that ecosystem, and it makes sense for us because we live in a world of cross-platform, multiple cloud ecosystems.

Golub Capital would like to thank Mo Rosen and Digital Guardian for participating in this edition of SaaS Talk.

UNDISCLOSED

Late Stage Lending Facility
April 2019 Administrative Agent
Sole Lead Arranger & Sole Bookrunner

UNDISCLOSED

Late Stage Lending Facility
May 2019 Administrative Agent
Joint Lead Arranger & Joint Bookrunner

UNDISCLOSED

Late Stage Lending Facility
January 2019 Administrative Agent
Sole Lead Arranger & Sole Bookrunner

UNDISCLOSED

Late Stage Lending Facility
September 2018 Joint Lead Arranger
Joint Bookrunner

UNDISCLOSED

Late Stage Lending Facility
August 2018 Administrative Agent
Joint Lead Arranger & Joint Bookrunner

UNDISCLOSED

Late Stage Lending Facility
July 2018 Administrative Agent
Sole Lead Arranger & Sole Bookrunner
* GOLD facilities are Golub Capital One-Loan Debt
(one-stop) facilities.