Kansas City – February 1, 2018 – Novel Growth Partners, a revenue-based finance fund focused on small growing tech companies in the middle of the country, announced its official launch. Novel formed earlier this year to provide financing to companies that don’t fit the traditional venture-capital model, but can leverage targeted amounts of capital to drive stable growth.
Novel is different from typical venture firms because it utilizes revenue-based finance, which operates much like a royalty, to invest in its portfolio companies. Instead of taking equity and requiring the company to sell at some future point to generate a large return on the original investment, Novel’s investment gets paid at a set monthly percentage of the company’s revenue over time. This means that the entrepreneur is able to preserve her ownership while she grows the value of her company. Novel further adds value by providing its portfolio companies a growth boot camp focused on identifying and executing specific projects meant to accelerate revenue growth.
Novel was born out of the personal experiences of the co-founders in the technology entrepreneurial and investing ecosystem where they noticed a mismatch between the types of early-stage businesses looking for funding and the types of capital they were pursuing. The new fund will be complementary to the growing set of options for early stage entrepreneurs in the region.
“At Novel, we believe that the current financing ecosystem excludes the majority of companies seeking financing. We know that only a small percentage of companies get venture capital and most young companies are too small for private equity and can’t get meaningful bank financing,” says Novel co-founder and Managing Director Keith Harrington, a former Managing Director at Kansas Bioscience Authority and recent Kauffman Fellow graduate. “We also recognize that there is a very large set of early stage companies with revenue and growth that can benefit from the unique combination of capital and operational expertise we deploy.”
Novel co-founder and Managing Director Carlos Antequera, former co-founder and CEO of Netchemia, which sold to Vista Equity Partners in 2015, adds that unlike standard VC investors, Novel isn’t looking for hockey-stick growth companies. “We’re on a mission to provide capital to companies that have some revenue, customers and are focused on improving their business fundamentals, but in addition to capital, need improved sales systems, processes and talent to grow,” Antequera says. “Because venture requires rapid scaling, it is not the right type of capital for many companies. Equity venture investors cannot fund slow growth opportunities. That’s where we come in, our model allows us to provide capital to companies with steady growth.”
Novel is not alone in its belief that the current financing ecosystem is in need of new solutions. Village Capital President Ross Baird says, “In my book, The Innovation Blind Spot, I highlight how the existing venture capital industry only serves 1% of the entrepreneurs in the country, and we need innovators like Novel Growth Partners to develop solutions for the other 99%. Through my work at Village Capital, I’ve seen revenue-based financing deliver support to entrepreneurs, and returns to investors, and I’m thrilled that Novel Growth Partners are leading the way in innovative finance in our country.”
About Novel Growth Partners
Novel Growth Partners is a revenue-based fund with a mission to improve access to capital to technology companies in underserved markets. Novel provides companies up to $500K in growth capital. Novel leverages the operational expertise of its founders and partners to provide tactical sales and marketing support to entrepreneurs via its proprietary growth boot camp. Novel invests in entrepreneurs focused on growing revenue and building a near term profitable company committed to business fundamentals. Unlike other growth capital, Novel does not take equity or require a personal guarantee. More information is available at www.NovelGrowthPartners.com
