Novel Growth Partners Raises $12M for New Fund; KC-based but Expanding to Chicago, Indianapolis, St. Louis.
Kansas City, KS, December 10, 2019 –(PR.com)– Small high-tech businesses have been a noted high-octane engine for new jobs, income and economic growth. However, severely limited access to capital for early-stage companies has hindered that growth, as the existing venture capital market (VCs) primarily serves a fraction of the nation’s entrepreneurs.
According to a 2018 CB Insights MoneyTree Report, only 5,536 out of over 500,000 new companies received VC institutional funding – with just 25 percent of those being early-stage investments.
Offering its unique revenue-based financing model – and focusing on B2B software startups – Novel Growth Partners was launched in 2018 to explicitly meet the needs of such early-stage companies that traditionally have been unable to secure capital investments, acquire operational sales help or leverage strategic know-how to drive sustained growth.
Novel is distinguishing itself as an entrepreneur-centered option for companies seeking growth capital that are not good fits for VC equity investments or need a “bridge” to their next financing round.
And because market needs are great, the Kansas City-based firm has been steadily gaining traction: It recently announced the successful close of their oversubscribed first fund at over $12 million. Additionally, Novel is increasing tech investments to Chicago, St. Louis and Indianapolis – in which it already has a significant portfolio presence – along with other Midwestern cities.
Revenue-Based Financing: The Basics
As an alternative to traditional financing, most notably venture capital, revenue-based financing (RBF) provides a non-dilutive option that empowers companies to grow while preserving equity. RBF provides growth capital with companies paying obligations back as a small percentage of monthly revenue up to a predetermined return cap. Relative to traditional venture capital which often takes several months, Novel’s RBF model facilitates far faster funding.
“We’re able to provide investment in a more expeditious fashion due to the fact that we don’t need to negotiate the company’s valuation, organize a syndicate, or wait for the lead investor,” said Novel Growth Partners co-founder Keith Harrington. “While we do operate as a standalone investor, we also partner with traditional investors, such as venture capital firms, to provide best-fit financing, tailored to where each company may be in its unique, business journey.”
RBF Investment Versatility; Distinct Marketplace Presence; More Than Just Capital
Novel Growth Partners, quite versatile in its portfolio investments, pursues software companies with varied fundraising legacies, from bootstrapped companies to those with venture capital backing. “While early stage technology companies have traditionally viewed venture capital or bootstrapping as the only avenue for financing, we provide another viable option,” explains Novel Growth Partners co-founder Carlos Antequera.
“There are many B2B SaaS businesses that could be thriving if they focused more on revenue growth over devoting all their energy to raising another round of funding.
“The early-stage B2B software market requires alternatives to capital access, but capital investment is not enough to succeed,” he stresses. “Because of our entrepreneurial background and operational expertise, we look at investing differently at Novel. We’re aligned with the entrepreneur from day one. We want to help them build a company that generates revenue efficiently and consistently.
“Our growth bootcamp provides invaluable insights to improve their sales processes. We believe that increases the value of their company and the likelihood that we will have a successful investment.”
Testimonials from Novel Portfolio Companies
“When we received highly competitive National Science Foundation SBIR Grants totaling nearly $1 million we were encouraged to seek out additional venture capital investment to accelerate growth. We did not feel comfortable with any of the VC potential partners we met. They seemed pretentious and wanted an equity position in the company. Then we met the Novel leadership. They seemed genuinely interested in us and our business and were willing to invest capital and resources to help develop our sales strategies. Once funding officially closed, they spent significant time with our management team. Although they have substantially grown since our initial engagement, they still make time to provide feedback and advice when we need it.” – Guy Townsend, CEO, MyMajors, Kansas City, MO.
“Novel has been an incredible sounding board for various aspects of the Gremlin Social business – from providing guidance in selection and development of an advisory board to the execution of sales strategies that are shaping our continued growth and evolution.” – Doug Wilbur, CEO, Gremlin Social, St. Louis, MO.
“We explored several venture debt firms and selected Novel for their extreme professionalism, collaborative style, and systematic approach. We haven’t regretted our decision. Novel has not only provided funding, but has also been a great strategic resource to help guide growth initiatives within the company. It has been a genuine partnership!” – Shaily Baranwal, CEO, Elevate K-12, Chicago, IL.
“Rather than just being a source of funding, The Novel team has been able to share entrepreneurial lessons (helping us avoid some key mistakes) while providing invaluable sales and marketing resources. Most of our investors simply want a report on what their funding is doing — Novel however, wants to help us make our funding do bigger things!” – Alex Linebrink, Passage, CEO, Detroit, MI.
About Novel Growth Partners
Novel Growth Partners is a revenue-based financing venture fund that provides flexible capital solutions to early-stage software companies. Novel provides companies up to $1M in growth capital and leverages the operational expertise of its founders and partners to provide tactical sales and marketing support to entrepreneurs via its proprietary Growth Bootcamp. Novel invests in entrepreneurs focused on growing revenue and building a near term profitable company. Unlike other growth capital, Novel does not take equity or require personal guarantees. Novel has invested across the U.S. in companies in a variety of industries, including education, marketing, real estate and sports performance analytics. More information is available at www.Novelgp.com