Royalty-Based Growth Capital

Flexible, Patient and Entrepreneur-Friendly

Drawing on our experience with more than two-dozen royalty-based growth capital investments since 2010, Cypress has refined a royalty investment approach specifically tailored to the unique financing needs of emerging companies.

 

How It Works

An alternative to equity and traditional debt, royalty-based growth capital provides funding in exchange for a fixed percentage (the royalty rate) of your company’s future monthly revenues. The actual dollar amount you pay each month fluctuates with your company’s revenue performance. The terms are simple: when the sum of the monthly royalty payments reaches a pre-determined cap, the obligation is complete.

Cypress structures each investment as flexible, long-term debt with the following entrepreneur-friendly features:

  • no fixed loan term
  • no minimum payment requirements
  • no balloon or lump sum payments
  • no restrictive conditions
  • no personal guarantees
  • up to $5,000,000 in growth capital available in customized tranches

 

How It Can Be Used

Cypress provides capital to fuel the growth of your business in a variety of scenarios:

  • As a bridge to a future equity round, likely at a higher valuation
  • As a bridge to a future sale of the business, allowing you to preserve ownership and financial value
  • As acquisition capital to finance the cash component of a transaction
  • Or simply as growth capital for the business owner who desires funding that does not require giving up substantial equity and control

 

Benefits

  • Preserves your equity because it is structured as debt
  • Friendly to your cash flow due to its adaptive payment structure
  • Allows you to fuel your growth without the constraints of traditional debt
  • Aligns entrepreneur and investor interests as it does not require a liquidity event for success
  • Preserves control for the business owner who wants to keep his or her company closely held; we never require a board seat.
  • Provides the flexibility to take the capital you need when you need it; Cypress builds in additional tranches available at your option.
  • You gain an experienced team of entrepreneurs and operating executives who understand the software and services industry, providing access to useful advice and assistance.