Investors loan us money at a set interest rate of 12%. We lend that money out to SaaS founders at a higher rate. This means we’re usually not a fit for founders who have raised significant venture capital because you can go to a bank and get a cheaper rate in the 5-9% range with 0.1-0.5% warrant coverage and covenants.
We make money by loaning money at a higher interest rate than what we raise at. The same way that a local bank takes consumer deposits at 0.1% interest rates, and then loans them out to homebuyers through mortgages with a 4% rate. We make money the same way (a spread) but we only lend to SaaS founders and don’t take your house if you default (no personal guarauntees).
No origination fees. No due diligence fees.