Our revenue-linked growth capital is designed for emerging growth companies, generally, including in high growth markets such as technology, SAAS, tech-enabled services, systems, blockchain, AI, big data, cannabis and healthcare IT.
Flow does not invest in companies that operate in the industrial, bricks and mortar retail, traditional mining extraction, oil and gas extraction, film and pharmaceutical drug development sectors.
Our investments are structured on a contractual relationship whereby Flow Capital and its portfolio company commit to paying a small portion of future revenues in exchange for cash today. In each case, Flow seeks to purchase up to 4% of the future revenues of a company. The royalty is paid monthly with no additional charges, fees or interest.
Our financing is structured to align our investment with your revenue goals, aligning our growth with yours. The structure of the royalty over the long term is flexible and is established according to your unique business situation.
We also work hand-in-hand with our portfolio companies to collaborate in developing future buydown and buyout strategies to reduce or eliminate the royalty rate over time via mutually beneficial transactions.
Companies within our portfolio have more than $1 million in revenues, strong growth, capital efficient business models and are run by seasoned and invested executives.
Flow is currently focused on investing in companies based in the United States and Canada.
We currently target initial investments of $500K to $1 million, with the intent of growing our investment over time. Frequently we invest alongside syndicate partners at the time of initial investment so that our portfolio companies maintain financial stability by having more than one capital partner at the table.
Flow Capital's royalty model is adaptable and able to accommodate a high degree of seasonality. We tailor our terms to work with the business that you are operating. An example would be our ability to establish a rolling average monthly payment, ensuring our royalty structure works seamlessly with your cash flow generation.
Cost, control, simplicity and transparency are all words used to describe our value proposition. Flow's model aligns with management’s plans for quickly growing the value of their business while minimizing dilution. We want business owners to retain control of the business they have created – our terms speak to that. We do not require any type of exit or sale of your company to realize our returns and benefit only when the owners do.
There are no onerous financial covenants, no board seats, and there is no dilution of ownership. We offer flexible buydown and buyout alternatives with no mandated principal repayment date, which limits your risk as an owner.
Traditional debt requires collateral to secure the capital. If your company has limited or exhausted traditional collateralized capital alternatives, or is not in favour of personal guarantees, your ability to secure debt financing is materially impaired. Furthermore, debt financing requires payment of principal, whereas our form of capital never requires retirement of the facility. With our form of financing, the cash can remain in the business for growth.
Selling equity can be complex and expensive for high growth businesses. Equity pricing is costly when your business is growing rapidly, and liquidation preferences, control rights and board seats actually can cause you to lose control of your business, and the bulk of cash proceeds upon sale.
Furthermore, traditional forms of debt or equity may not be available to all companies on commercially attractive terms. Our experience has been that Flow Capital works as a catalyst for further investment, acting as a “first-step” investor to get the conversation moving towards more favourable terms in negotiating traditional debt or equity alternatives.
None, there is no interest paid. Repayment is in the form of royalties on top-line revenue only.
There are no hidden or ongoing fees, there is only your royalty payment.
There are legal and initial closing fees at the front-end, which are clearly outlined and agreed upon in advance of any transaction. Flow Capital takes pride in knowing the fees which are levied are substantially lower than the fees associated with traditional alternatives.
There is no repayment of principal required in our royalty agreements, however, there are buydown and buyout options available for you to exercise at your election.
Flow's royalty offering is a hybrid structure with features of between mezzanine debt and equity. Like mezzanine debt, it has recurring monthly payments. Like equity, our investment is subordinated to all other existing debts at the time of investment and generates higher returns when the owners generate outsized returns through growth or a sale of the business. With these hybrid features in mind, our structure is priced in between mezzanine debt and equity.
We waste no time getting you the funding you desire. Within a week of our initial conversation we deliver a term sheet for your approval. Once executed, closing can follow within as little as four weeks.
It is not until we agree to move forward that legal fees are incurred. These associated fees are outlined in the executed term sheet and are set at a capped amount.
All legal fees are paid upon closing from proceeds of the funding.
We have endeavored to mitigate high legal costs by instituting a standardized legal and closing procedure. It is our aim to make every client’s experience as cost-effective as possible.
Yes, upon request.