Technology companies’ financing needs are very similar to those of SaaS companies. They require significant resources to fund growth initiatives, market expansions, or new acquisitions — and yet, financing options are seldom available from traditional lenders, who are far more apt to finance positive cash-flow enterprises with significant tangible assets.
Saratoga Investment Corp. helps to fill that void, offering loans to growing enterprises, largely on the basis of the recurring revenue they draw from subscribers. We find the subscription business model of technology companies in general, and managed service providers in particular, appealing for its predictability and strong ROI for the end user.
Saratoga Investment Corp. is a publicly traded (NYSE: SAR) business development
company (BDC). We provide customized financing solutions for middle market companies located in the United States. Our investment professionals have a combined 80+ years of experience investing over $4 billion in middle market businesses.
Financing we offer:
- Leveraged & Management Buyouts
- Recapitalizations
- Growth Financings
- Acquisition Financings
- Transitional Financings
We work with technology businesses in the following industries:
- Education
- Finance
- Healthcare
- Hospitality
- Media & Telecommunications
- Specialty Chemical
The key quantitative parameters we consider when engaging in technology financing are recurring revenue, customer acquisition and customer churn rate. We typically work with companies with revenues of between $8 million and $250 million and EBITDAs of $2 million or more.
From a qualitative perspective, we work with enterprises featuring strong management teams, as well as those that hold a leading marketing position or a niche with a sustainable competitive advantage. We also seek companies with strong growth potential, and those that can withstand the fluctuations of business cycles.
For more information about our technology financing opportunities, contact Rich Petrocelli or Marissa Mann.
Why financing for technology based businesses is so important
Digital transformation is critical for businesses in all sectors in this day and age. That transition was found to be especially critical during the coronavirus pandemic, when the pivot toward remote work became commonplace for numerous enterprises.
As a result, the managed services software market, valued at $180.5 billion in 2018, is projected to rise to $282 billion by 2023, a CAGR of 9.3 percent. As mentioned above, we value enterprises that exhibit such growth, and in return offer flexible financial solutions and transparency without requiring business owners to relinquish managerial control.
Specifically, Saratoga offers such solutions as subordinated debt, first and second lien loans, one‐stop and unitranche structures and equity co‐investments.
To see if you qualify for a technology loan, contact Rich Petrocelli or Marissa Mann.