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

SaaS Meter

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”) comprises publicly traded SaaS companies that are listed on the NYSE and Nasdaq

– The Golub Capital Private SaaS Tracker (“GC Private SaaS Tracker”) 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.

A conversation with Bessemer and Golub Capital

Rob Sverbilov, Senior Director at Golub Capital

Brian Feinstein, Partner at Bessemer Venture

Bessemer Venture Partners is one of the largest and oldest venture capital firms in the world. In this edition of SaaS Meter, Golub Capital Senior Director Rob Sverbilov chatted with Bessemer Partner Brian Feinstein to discuss trends in the hottest sector that every VC wants a piece of: SaaS.

Rob: Can you tell me about Bessemer and your focus area?

Brian: Bessemer is the world’s oldest venture capital firm. In the last 50 years, we’ve participated in more than 120 IPOs. We achieve that kind of success by investing in great founders who go after big market opportunities. That’s the simplest way to put our investing thesis, and it keeps working.

We’ve found great success in the SaaS market since we began the practice 20 years ago. We’ve IPOed more than a dozen SaaS companies, including Shopify, DocuSign, Twilio, SendGrid and Box.

My focus is on picking the winners in vertical software—in other words, the software providers that are serving the needs of a specific industry.

Rob: How does Bessemer identify winners in enterprise software?

Brian: When we began investing in vertical software about 10 years ago, the conventional wisdom was that vertical software wouldn’t be able to generate returns that warranted VC investment. The markets were too small. But we’ve found that great founders with fantastic products can capture disproportionate market share in their vertical markets and build massive companies. We’ve seen this time and time again—Shopify in retail, Guidewire in insurance, Veeva in healthcare—the list goes on.

Rob: What kind of metrics does the team leverage?

Brian: Since we’ll invest at any stage, we look for different metrics at different stages of company growth.

At the series A stage, you’re betting on great founders, great products and large market opportunities. We hope that the combination of those three will make magic happen. This kind of bet has paid off in the past, with Twilio and Shopify, among many others.

When we get into series B and C stages, we look at companies doing between $5 million and $15 million ARR. At this point, we’re looking for evidence of a scalable go to market engine. The founders have achieved product / market fit, and are now building a scalable, repeatable sales engine that will continue to drive revenue.

We do plenty of later stage investments, too. Once we get into the C and D rounds, we look for $15 million or more in ARR, driven by a scalable sales engine and a deep product roadmap. The question here becomes, how long can the company sustain rapid growth? Is there a path to a multi-billion dollar outcome?

Through all investment stages, the core question remains: Does this company have great founders, with a great product, going after an exciting market opportunity? If the answer is yes, we’re interested.

Rob: What is the biggest opportunity in SaaS in the next five years?

Brian: I see billions of dollars of potential value in vertical software. According to Gartner, the biggest category of software spend is vertical software. In the next decade, we’re going to see more SaaS companies mature in each industry. Despite the progress that’s already been made, the majority of software is still on-premise or custom built and most industries are still radically underserved by SaaS products. The banking industry is a great example. The legacy on-premise software used by banks represents over $50 billion of market cap. We think a new generation of cloud vendors like Mambu and nCino will capture enormous value in the coming years.

You also have industries with large numbers of non-desk workers that have historically been neglected by software companies which mainly catered to knowledge workers sitting behind a desk. Now that everyone carries around a computer in the pockets, those industries are ripe for software adoption. The rapid growth of companies like Procore, ServiceTitan and Toast in the past few years speaks to this trend and its long-term potential.

Rob: Tell me more about other software areas where Bessemer is focused.

Brian: We remain very focused on software opportunities in cybersecurity, where we’ve been actively investing for the past 20 years. We have a special partnership with Team8 in Israel, which is launching innovative new cyber startups, and continue to look for opportunities in areas like cloud security, orchestration/remediation and products that help CISOs identify the signal from the noise.

Developer platforms are one of the most important areas for Bessemer and led to our early investments in companies like Twilio, SendGrid, Auth0, Zapier and LaunchDarkly. Every company is now a software company with over 20 million developers globally who are adopting developer tools at an unprecedented rate.

We’re also spending time investing at new software applications of machine learning. For examples, Qventus helps hospitals use machine learning to optimize patient flow and predict staffing needs. Shift Technology is using machine learning to fight fraud and identify insurance scams for large insurance companies.

Software is the gift that keeps on giving. As long as smart founders come up with ways to help companies better serve their customers or be more productive, there will be no shortage of growth and value creation.

Quick Meter Reading

  • Seed investments’ share of Venture deals increased by almost 7% in Q4 2018 quarter over quarter
  • Median Revenue Multiples reached record highs in 2018 in spite of tough market conditions in Q4
  • Vertical Software shows great potential with opportunities in Retail, Healthcare and Financial Services among others

Q4 2018 GC Public SaaS Tracker Companies1 Sorted by Market Cap

Ticker

Mkt Cap

(Millions)

Price

EV

(Millions)

LTM Rev

(Millions)

FWD Rev

(Millions)

EV/LTM Rev

EV/FWD Rev

1 Year Rev Growth

LTM Gross Profit

CRM

$104,782.05

$136.97

$105,723.05

$12,484.01

$15,261.45

8.47x

6.93x

25.23%

74.02%

WDAY

$35,129.60

$159.68

$34,738.28

$2,616.03

$3,342.22

13.28x

10.39x

30.79%

70.48%

NOW

$31,925.32

$178.05

$31,113.89

$2,608.82

$3,163.66

11.93x

9.83x

35.98%

76.13%

SPLK

$15,495.05

$104.85

$14,503.87

$1,602.23

$2,028.30

9.05x

7.15x

38.61%

79.71%

VEEV

$12,978.33

$89.32

$11,926.40

$810.88

$974.94

14.71x

12.23x

23.85%

70.44%

GDDY

$10,973.13

$65.62

$12,714.13

$2,660.10

$2,905.37

4.78x

4.38x

19.19%

66.40%

DATA

$10,028.14

$120.00

$9,071.38

$1,155.35

$1,239.95

7.85x

7.32x

31.73%

87.66%

TWLO

$8,827.94

$89.30

$8,511.36

$650.07

$785.22

13.09x

10.84x

62.92%

53.72%

DBX

$8,305.28

$20.43

$7,432.38

$1,391.70

$1,550.15

5.34x

4.79x

25.74%

71.64%

ULTI

$7,656.92

$244.87

$7,532.44

$1,140.54

$1,303.86

6.6x

5.78x

21.24%

62.15%

PAYC

$7,177.24

$122.45

$7,126.92

$566.34

$661.40

12.58x

10.78x

30.78%

86.54%

OKTA

$7,045.98

$63.80

$6,767.65

$364.28

$482.27

18.58x

14.03x

59.55%

71.31%

DOCU

$6,623.25

$40.08

$5,961.69

$650.11

$820.21

9.17x

7.27x

70.43%

73.68%

RNG

$6,622.65

$82.44

$6,410.77

$673.62

$780.51

9.52x

8.21x

33.76%

76.67%

ZEN

$6,248.02

$58.37

$6,249.33

$598.75

$728.47

10.44x

8.58x

39.19%

69.73%

ESTC

$5,073.22

$71.48

$4,751.75

$211.47

$301.47

22.47x

15.76x

139.83%

72.33%

TTD

$5,018.68

$116.06

$4,852.33

$477.29

$571.70

10.17x

8.49x

54.86%

76.09%

HUBS

$4,932.67

$125.73

$4,684.94

$512.98

$601.20

9.13x

7.79x

36.57%

80.44%

ZS

$4,793.43

$39.21

$4,479.39

$213.61

$291.25

20.97x

15.38x

53.90%

80.48%

CDAY

$4,761.48

$34.49

$5,245.28

$746.40

$790.30

7.03x

6.64x

11.27%

47.55%

NEWR

$4,611.89

$80.97

$4,280.01

$445.58

$527.06

9.61x

8.12x

35.05%

83.82%

PFPT

$4,580.04

$83.81

$4,389.71

$716.99

$826.58

6.12x

5.31x

37.97%

71.86%

MDB

$4,488.76

$83.74

$4,180.28

$215.74

$323.63

19.38x

12.92x

54.75%

72.00%

WIX

$4,367.90

$90.34

$3,986.23

$603.70

$719.30

6.6x

5.54x

41.84%

78.97%

RP

$4,361.51

$48.19

$4,679.15

$869.48

$971.49

5.38x

4.82x

29.59%

62.23%

PVTL

$4,290.74

$16.35

$3,626.65

$621.53

$772.24

5.84x

4.7x

49.31%

61.54%

SWI

$4,286.52

$13.83

$6,244.36

$833.09

$898.89

7.5x

6.95x

14.43%

91.51%

LOGM

$4,173.30

$81.57

$4,205.67

$1,203.99

$1,243.54

3.49x

3.38x

21.64%

76.70%

MDSO

$3,992.91

$67.42

$3,888.75

$635.70

$720.09

6.12x

5.4x

16.81%

74.96%

COUP

$3,736.70

$62.86

$3,502.02

$239.21

$297.16

14.64x

11.78x

39.85%

68.69%

AYX

$3,650.46

$59.47

$3,493.33

$253.57

$254.44

13.78x

13.73x

92.67%

91.01%

JCOM

$3,419.63

$69.38

$4,126.67

$1,207.30

$1,278.62

3.42x

3.23x

8.00%

83.35%

PLAN

$3,316.55

$26.54

$2,946.35

$217.73

$280.25

13.53x

10.51x

80.69%

72.54%

PCTY

$3,179.00

$60.21

$3,094.12

$417.73

$476.14

7.41x

6.5x

25.13%

63.75%

FEYE

$3,138.27

$16.21

$3,000.91

$830.95

$872.86

3.61x

3.44x

6.58%

67.21%

CSOD

$2,955.81

$50.43

$2,852.77

$537.89

$549.00

5.3x

5.2x

11.60%

73.16%

QLYS

$2,943.20

$74.74

$2,616.69

$278.89

$316.63

9.38x

8.26x

20.82%

76.27%

TWOU

$2,879.91

$49.72

$2,437.24

$411.77

$507.93

5.92x

4.8x

43.60%

78.02%

SMAR

$2,578.51

$24.86

$2,373.15

$158.53

$224.93

14.97x

10.55x

61.83%

80.87%

FIVN

$2,569.51

$43.72

$2,496.71

$257.66

$281.83

9.69x

8.86x

28.69%

59.62%

BOX

$2,420.68

$16.88

$2,318.82

$581.35

$700.08

3.99x

3.31x

21.27%

72.19%

BL

$2,237.71

$40.95

$2,112.59

$227.79

$264.63

9.27x

7.98x

29.72%

77.67%

ELLI

$2,189.09

$62.83

$1,916.85

$480.27

$495.00

3.99x

3.87x

15.16%

58.37%

QTWO

$2,149.23

$49.55

$2,031.33

$241.10

$289.50

8.43x

7.02x

24.29%

49.46%

AVLR

$2,071.63

$31.15

$1,933.41

$272.10

$305.38

7.11x

6.33x

27.65%

71.10%

TENB

$2,065.11

$22.19

$1,801.05

$267.36

$316.03

6.74x

5.7x

42.42%

83.85%

APPF

$2,028.32

$59.22

$1,982.75

$190.07

$224.11

10.43x

8.85x

32.17%

61.88%

ZUO

$1,968.24

$18.14

$1,808.69

$220.95

$278.04

8.19x

6.51x

95.52%

50.57%

UPWK

$1,925.08

$18.11

$2,113.41

$253.35

$286.24

8.34x

7.38x

25.08%

67.85%

APPN

$1,700.65

$26.71

$1,593.39

$226.74

$241.09

7.03x

6.61x

28.29%

62.55%

CLDR

$1,697.90

$11.06

$1,308.21

$434.68

$514.72

3.01x

2.54x

29.05%

70.49%

EVBG

$1,683.02

$56.76

$1,673.24

$147.09

$175.36

11.38x

9.54x

40.96%

68.18%

WK

$1,573.75

$35.89

$1,495.47

$244.34

$268.71

6.12x

5.57x

17.55%

73.05%

VRNS

$1,558.68

$52.90

$1,400.60

$270.29

$302.05

5.18x

4.64x

25.49%

89.89%

SVMK

$1,534.72

$12.27

$1,686.74

$254.32

$276.39

6.63x

6.1x

16.25%

69.34%

PS

$1,467.41

$23.55

$1,385.26

$232.03

$286.08

5.97x

4.84x

39.09%

73.05%

BNFT

$1,461.24

$45.72

$1,540.20

$258.72

$285.80

5.95x

5.39x

9.24%

50.03%

SPSC

$1,455.21

$82.38

$1,265.81

$248.24

$267.15

5.1x

4.74x

12.79%

67.07%

EBIX

$1,330.86

$42.56

$1,873.20

$497.83

$572.90

3.76x

3.27x

36.78%

66.17%

INST

$1,315.03

$37.51

$1,143.61

$209.54

$244.79

5.46x

4.67x

30.17%

70.46%

FSCT

$1,113.99

$25.99

$921.06

$297.65

$328.43

3.09x

2.8x

32.64%

77.19%

LRN

$952.74

$24.79

$847.38

$977.92

$1,011.57

.87x

.84x

10.59%

36.06%

CBLK

$911.45

$13.42

$747.69

$209.72

$241.79

3.57x

3.09x

30.44%

78.18%

UPLD

$587.24

$27.18

$729.38

$149.89

$185.04

4.87x

3.94x

53.02%

67.58%

DOMO

$517.01

$19.63

$409.11

$133.13

$161.76

3.07x

2.53x

78.60%

63.08%

MOBL

$484.50

$4.59

$382.21

$193.19

$207.89

1.98x

1.84x

7.47%

81.92%

PT

$392.36

$10.47

$718.04

$1,052.64

$0.00

.68x

.x

85.09%

47.26%

ZIXI

$310.53

$5.73

$286.56

$70.48

$73.86

4.07x

3.88x

7.33%

78.45%

ECOM

$309.99

$11.35

$262.51

$131.22

$136.83

2.x

1.92x

7.09%

77.52%

CDLX

$231.89

$10.83

$230.89

$150.68

$175.53

1.53x

1.32x

15.59%

36.29%

AMBR

$228.73

$8.23

$240.44

$85.17

$88.96

2.82x

2.7x

7.70%

55.20%

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 12.31.2018


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’s Late Stage Lending group offers growth debt opportunities to venture-backed, late stage SaaS companies. Golub Capital’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.

Golub Capital is a market-leading, award-winning private debt platform with over $30 billion of capital under management. Golub Capital’s Middle Market Lending business specializes in delivering reliable, creative and compelling financing solutions to U.S. middle market companies backed by private equity sponsors. The Middle Market Lending team has particular domain expertise in select industries, including software, technology services, healthcare, consumer and restaurant and retail. The firm’s credit expertise also forms the foundation of its Late Stage Lending business and its Broadly Syndicated Loan investment program. Across its activities, Golub Capital nurtures long-term, win-win partnerships that inspire repeat business from its private equity sponsor clients and investors. Founded in 1994, Golub Capital today has over 400 employees and lending offices in Chicago, New York and San Francisco.

UNDISCLOSED

Late Stage Lending Facility
January 2019 Administrative Agent
Joint Lead Arranger & Joint 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

$28,000,000

Late Stage Lending Facility
June 2018 Administrative Agent
Sole Lead Arranger & Sole Bookrunner

UNDISCLOSED

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