Turning the corner
July 25, 2022
As of last Friday, we officially reached an inflection point in the company. For the first time ever, we closed a third party underwritten transaction, one where we left the infrastructure that we've built do the talking. We couldn't have scripted a better story for how this first deal came to life and everything worked exactly as planned.
On June 16th, a friend of mine reached out asking if we could help him place some corporate debt for one of his portfolio companies that he had invested in. What we had thought was more traditional venture debt ended up being a structure that was significantly more complicated and one that our investors, nor we, had ever seen before. Still, we pressed forward as some of the other third party underwritten deals were taking a bit longer to get over the finish line. This one also had the unique chance to be a pure third party underwritten deal, not co-underwritten by us, which plays even better into the narrative we've been trying to tell.
Diligence kicked off and because they had already done the work and we weren't co-underwriting, we could leverage all of what they had pulled together from both the equity investment and the debt they had structured. In what had to have been the shortest time to market ever, we managed to wrap everything up from diligence to documentation to committee approval in preparation for a launch the week of July 11th. Adapting our market standard deal documentation that we've spent over 330+ transactions honing and finessing made for a simpler process and the revamped committee process streamlined the path to approval.
As we watched the book build, we thought we'd come up a bit short as demand was a bit tepid heading into the first weekend with the closing date of July 22nd looming large. What didn't help matters was the fact that we had multiple deals open at the same time. At that point we had to get a bit creative and see if we could find ways to drum up more interest. Several calls were made to longtime and large supporters of the platform in addition to the ones who invested in our venture debt deal as well which brought in a few hundred thousand. We sent targeted emails to others who had cash coming back from other deals to see if they'd be interested in keeping it deployed. Heading into Friday the 22nd we were still short but demand was coming in at a steady clip. It took [ ] being willing and happy to downsize their existing note at a lower cost of capital after seeing the order book build at various APY ranges that opened the floodgates. 27 of the 70 orders came in on that Friday, totaling close to half the deal.
By 5PM, as we were gearing for a close, we managed to be oversubscribed. Thanks to the new syndication system, we knew we couldn't close for less than the highest rate as the demand wasn't there at any lower rate. Still, we also knew that we could prioritize some of the investors, locking in certain bids and proportionally downsizing others so we can get to the even [ ]. With a few clicks, it was all squared away and allocation was complete.
This is what we've been working towards, talking about, pitching and selling for the last few years. To top it all off, we know exactly where we need to go next to supercharge the platform even further. It's all coming together 💯
