Tag

ARR

6 insights

Two stacked bars of available liquidity. The annual biller holds $4.5 million of cash and is offered a $2.5 million facility, $7.0 million in total, of which $5.0 million is service already paid for and still owed. The monthly biller holds $1.2 million of cash and is offered $4.8 million, $6.0 million in total, of which $400,000 is owed.

Annual Billing Made You Cash-Rich. It Also Halved Your Facility.

Two software companies have identical ARR and retention. One bills annually in advance and holds $4.5 million of cash. The other bills monthly. The monthly biller is offered $4.8 million of debt against the annual biller's $2.5 million.
Financing StrategyBorrower Advisory
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A grid of 100 squares, each worth $100,000 of a software company's $10 million ARR. Seventy squares are other customers and count toward borrowing. Thirty belong to the largest customer: twenty count and ten, the excess above a 20 percent concentration cap, do not.

Your Biggest Customer Grew. Your Borrowing Capacity Did Not.

A $10 million ARR software company adds $2 million of new ARR. From its largest customer, that lifts borrowing capacity by $240,000. From two new customers, the same ARR lifts it by $1.44 million, six times as much.
Financing StrategyBorrower Advisory
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A two-point range showing that a company at $500,000 of monthly recurring revenue can access $2.0 million at a four times multiple or $4.0 million at eight times, a $2.0 million spread on identical revenue.

Most Debt Is a Fixed Number. This One Is a Multiple of MRR.

A term loan is sized once and never changes. A committed facility against recurring revenue is sized as a multiple of monthly revenue, and availability rises as that revenue rises, without a second underwriting.
Financing StrategyBorrower Advisory
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Two stepped areas showing monthly revenue still under contract over the next 24 months for two companies with identical $6.0 million ARR: a 12-month contract book holding $2.5 million of remaining contracted value and a 24-month contract book holding $7.0 million.

ARR Reports $6 Million. The Facility Sees $2.5 Million.

Two recurring-revenue companies each report $6.0 million of ARR. One is offered a $2.0 million facility and the other $1.0 million. The difference is contract length, and it does not appear in any metric either company reports.
Financing StrategyBorrower Advisory
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Column chart of what private shares fetch as cents on the dollar of the last round price, by the year that round was priced: about 40 cents for a 2021 mark shown in the darkest navy, 83 cents for 2024, 99 cents for 2025 and 100 cents for 2026.

A 2021 Mark Costs Your Holders 60 Cents.

Private shares trade below the last round price, and how far below depends on when that round was priced. A 2021 mark trades around 60 percent under. A 2025 mark trades around 1 percent under. What that costs an early holder.
Business Case & ROIBorrower Advisory
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Two point range chart contrasting 18 months of runway raised at close against a median 26 month interval to the next round, with the eight month shortfall marked in navy.

You Raised 18 Months of Runway for a 26-Month Gap.

The median interval from seed to Series A has stretched to roughly 2.2 years. A company that closed with 18 months of cash is eight months short before it does anything wrong. What the decision looks like at month 10 against month 16.
Business Case & ROIBorrower Advisory
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