SaaS Interviews with CEOs, Startups, Founders
EP 320: With a $150M War Chest, He Gives SaaS Businesses Friendly Loans
09 Jun 2016
Chapter 1: How does Boost&Co differ from traditional banks and VCs?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million. He is hell-bent on global domination.
Chapter 2: What types of companies does Boost&Co invest in?
We just broke our 100,000-unit soul mark. And I'm your host, Nathan Latka. Okay, Top Tribe, this week's winner of the 100 bucks is Dustin Goodwin. He's in the HR industry, specifically in the software as a service space, looking to increase his revenue. So congratulations, Dustin.
Chapter 3: What is the structure of loans provided by Boost&Co?
For your guys' chance to win 100 bucks every Monday on the show to build your idea, simply subscribe to the podcast on iTunes now and then text the word Nathan to 33444. Again, text the word Nathan to 33444. You are listening to episode 320, and bright and early tomorrow morning in a new episode, you will hear from Lori. He's focused on social impact and still makes loads of cash. How's he do it?
Chapter 4: What are the interest rates and fees associated with Boost&Co loans?
Top Tribe, good morning, everybody. You're gonna enjoy our guest today. His name is Lance Myserbowich, and he was the founder of Boost & Co., They look for innovative small businesses in Europe to fund with growth capital. They do this through a variety of ways.
Chapter 5: How does Boost&Co manage risk in its investments?
I think you're going to enjoy meeting Lance. So without further ado, Lance, are you ready to take us to the top? I am indeed. Good morning, Nathan. Good morning.
Chapter 6: What was the last deal Boost&Co completed and why?
So you're a little bit different. We've had Adam Valkane from General Catalyst on and Tim Draper from obviously the VC world in California on. You're a bit different. Explain to us what Boost & Co does and how it's different from VC. Sure.
Chapter 7: What is mezzanine finance and how does it relate to Boost&Co?
Boost & Co funds early stage high tech companies through loans. So we lend money to these companies earlier in the development of these companies than the banks do.
or we lend them more money than the banks and against that we get a higher remuneration than the banks that higher remuneration in the banks is less costly to the smes in terms of dilution in terms of lost loss of let's say management control than venture capital so we sit in between
And would you say you're more or less advantageous than the big two in the venture debt world, Silicon Valley Bank and Square One? We are different.
Chapter 8: What are Lance's personal insights on happiness and success?
We are similar pricing, but we are different because we do not... rely on companies who have venture capital already invested in their cap tables. We do this. We don't wait on a syndicate necessarily. You do it by yourself. We do it by ourselves. Absolutely. Very cool. Well, tell us real quick, just because this is a concept I think that listeners may or may not be familiar with.
So tell us real quick, how many total deals have you done? And then what does that add up to in dollars? Sure. So in my life, probably 100. But at Boost, we're up to about 25 deals now and call it about $120 million. Okay, lended. Yes. And is this model in terms of where you get that pool of money to invest? Is it the same as VC? In other words, you have LPs in Boost & Co or what?
Yes, we have a large pension funds as LPs. And obviously, the Boost & Co team itself has a bit of money in the funds. to align everybody's interests. That's great. And Top Tribe, what LPs are? Those are just the limited partners. So Lance has relationships with pension funds, which give him capital that help him kind of make these loans. Is that accurate, Lance? Absolutely. Okay, wonderful.
So tell us real quick, let's spend a minute. Tell us a story of the last deal you did. What was the company name? How much you put in? Why'd you do it? Sure. Last company we did was a company called Idio, I-D-I-O. It's a SaaS company, and what it does is it figures out what people are reading on a web page.
What that does for the company that's buying the Idio product is allows them to refine their content marketing, so they know what's being read, what people are interested in, so they can produce more of that specific content for that specific individual. It reduces their marketing costs because they have less writers or less content producers who are producing more relevant stuff.
And it drives, obviously, customer engagement because if you provide interesting and relevant information to people, they tend to engage with you a lot better, as I'm sure, Nathan, you have discovered through your podcast. Of course. And this is ideoplatform.com, correct? Correct. Yeah. Great. So, OK, so tell us about the actual mechanics of the deal. How much did you put in?
We have put in 1.25 million pounds, so about $175 million. Okay, and help us understand what that means for the company. What does the CEO owe you? Is it an 8% interest rate? I mean, how does it actually work? Yeah, we make our money in three different ways. Fees, interest, and warrant. So fees is, let's say, 1% to 2% of the amounts that we lend.
Interest rate is anywhere between 8% and 12% of the money capital outstanding on the loan. And then the warrant is a right to buy shares of the company at a specific price. And we ask for roughly 10 to 15% of the amount we lend in warrants. Okay. Let me just capture all that for a second. Okay. Let's go backwards to forwards. So on the warrants, you said you do you.
So, you know, a lot of entrepreneurs will do a convertible note to avoid the valuation discussion. Right. So they'll do a priced round later with these warrants. Do you agree to a price? I guess it's probably a strike price for the for shares when you do the deal. Or do you just negotiate the right to negotiate the price later on? No, we negotiate a strike price and it can either be fixed.
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