In this episode of How I Invest, Billy Libby, Co-Founder and CEO of Upper90, discusses how his firm is redefining venture capital through a hybrid investment model that combines equity and credit. He shares how Upper90 empowers founders to scale without excessive dilution and offers insights into navigating today’s venture landscape. Billy’s approach to alternative financing provides valuable lessons for entrepreneurs and investors alike.
Full Episode
to all AI cloud computing. Will you help us figure out how to finance this equipment? At the time, it wasn't really well understood by banks. We look for these equipment-oriented businesses where we can help kind of season before it becomes well understood and well accepted as an asset class. So today, there's institutions from Blackstone and others that are financing NVIDIA chips.
Two or three years ago, you can think about financing those partially with Grubhub and Seamless merged in 2013. The businesses were similar size, but the Grubhub team owned a substantial larger stake in their company. Why is that?
My partner, Jason Finger, was a lawyer for a moment and had to go and order dinner for his bosses and saw that he could get a 2% cash back on his credit card if he ordered it through his own means for the order. So that's kind of how Seamless started. But he was educated in tax and finance.
And so when he raised money for Seamless, he raised a small amount of equity, like hundreds of thousands of dollars.
And when he would sell that service, he would get the customer to, instead of paying over two years, maybe to pay those two years up front and figuring out ways just to get access to, you know, working capital lines and stretching dollars and effectively thinking of using credit, right? And that really helped him grow the business where equity would have been raised in much larger quantums.
the vast majority of Seamless was owned by the management team. The Grubhub team, which was Chicago-based, ended up raising more of the traditional, you raise a seed round and then you prove the concept, you raise the A round, you raise the B round. It's almost just like flight of passage.
It's like, you know, how many announcements can you get and how big can those rounds be and how preempted can they be? There's nothing wrong with that, but when they ended up merging Seamless,
you know, the businesses because of that capital structure and because of the use of credit and just different tools, the Seamless team owned the majority of the business and the Grubhub team on the minority of their business, same business, same size. And I think when Jason and I connected, he's like, most founders are just, they don't think of these tools. They're not taught about credit.
And that's really drives his interest of upper 90 and helping founders have different paths to own more of their company. When a lot of startups think about credit, there's this perception that it's only for fintech companies. What kind of startups can utilize credit?
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