The backstory
Blackthorn builds Salesforce-native apps that make processing payments and managing events efficient and easy. Founder and CEO, Chris Federspiel, started Blackthorn in 2015 because he noticed people were spending way too much time creating and running events but struggling to measure them, making it hard to prove their value.
With their two main products, Event Management and Payment Processing, Blackthorn helps businesses to focus on essential tasks, reduce repetitive work through automation, compile complicated data and leverage their CRM tool to its full potential. Customers are able to use the Salesforce platform to run their businesses the way they want, lets them spend less time on logistics and more time on the fun stuff: creating engaging virtual experiences.
Running a growing company and retaining ownership is a balancing act. We sat down with Chris to find out how he used non-dilutive financing to scale:
The funding dilemma
“I didn't want to give up 20% of the company for ~$10M, because we can't spend $10M tomorrow.”
As the company's success grew, the founding team realized the need for raising more funding to boost their scale. Being a seasoned founder, Chris knew that going the traditional route would mean giving away a huge chunk of what he’d built. That just didn’t sit right with him. Especially as it would take a long time to spend all this bulk capital for recruiting, training, building processes, sales strategies, and product/solutions development.
“20% is equivalent to ~$80M of the exit value. If instead we can pay $500k-$1M of fees, why would we give up more?”
For Blackthorn, it didn't make sense to acquire funds they would not utilize immediately. The company considered getting funded by a bank, but they were not eligible because they were at the early stages of growth, reinvesting everything in hiring people. The fees from private lending were reaching 25-30%+. Not ideal.
How to fund a growing business that needs immediate cash to fuel expansion?
Boosting growth with programmatic finance
Cue an alternative to traditional financing: this is when Blackthorn met Capchase.
Capchase helps founders fund their businesses without dilution. We use data (balance sheets, business metrics and more) to help decide exactly how much money it needs, which is then charged at a set percentage. It’s faster, fairer and more flexible - and it was what Chris was looking for.
“I lose zero control, I don't have a personal guarantee so I can sleep at night, and we can get a loan outside of this model (such as a personal $200-$300K loan). We've now doubled headcount ahead of revenue by taking on debt with fees, instead of losing control + exit value.”
Blackthorn were able to double-down on growth without giving up what they were working so hard to build. Plus, they still had the flexibility to take an additional loan outside of this model if they wanted to. This model resulted in doubling the headcount for Blackthorn and ramping up the company's operations ahead of revenue rather than losing control and sacrificing exit value. With big plans for the future, Chris and his team are able to continue their business growth and deliver greater value in what they’d set out to do: building a better experience for their customers.
"Capchase is the financial partner we needed two years ago; I wish I had discovered them sooner. They've enabled us to expand ahead of revenue by assisting us in developing a financial model that incorporates head counts, costs, and income, all while maintaining excellent communication and trust." - Chris Federspiel, CEO, Co-Founder.
To learn more about Blackthorn, head to Blackthorn.io
