Capital Advisors Group Survey Finds Venture Debt Lenders Are Open for Business

The COVID-19 economic slowdown has stopped many startups and emerging growth companies in their tracks, but lenders who provide needed cash to them during good times are still open for business, according to a national survey (Webcast: https://www.capitaladvisors.com/pressrelease/survey-finds-venture-debt-lenders-are-open-for-business/) conducted by Capital Advisors Group. At the same time, lenders have tightened conditions for approval of loans, requiring more assurances that borrowers are positioned to emerge from the crisis with operations and business models intact.

“Of more than 65 lenders surveyed, 92% said they are still closing deals and negotiating new opportunities for young, emerging companies seeking cash,,” said Stefan Spazek, Capital Advisors Group EVP and director of debt placement. “But requirements are more stringent, and typical timelines to close new deals will likely be extended.”

“Even if lenders are much more cautious during the next one to two quarters, the survey indicates that capital will continue to flow now and as we emerge from the pandemic,” Spazek said. “But it’s also clear that most lenders will be, first and foremost, concerned about investments in their existing portfolios.”

Challenges for a multibillion-dollar specialty debt market

Capital Advisors Group has been advising growth-stage companies on debt financing transactions since 2003. The survey targeted specialty lenders who operate in a multibillion market serving venture backed startups and emerging growth and lower-middle-market companies. Many are still in R&D mode or early product development in high-growth sectors, such as technology, biotech, and healthcare.

“Venture debt” is a broad term that refers to loans that help new and emerging growth businesses extend cash life beyond the venture capital they have raised to reach development milestones. Borrowers may not be profitable or even generate revenue in some cases and may need additional financial support to continue product development, rollout new products or reach profitability. Therefore, they often fall outside the boundaries of normal commercial bank lending criteria.

The market for specialty venture debt financing is estimated at between $10 billion to $20 billion a year in the U.S. Lenders include venture banks, public and private funds, credit arms of business development companies (BDCs), private equity and hedge funds, and other specialty finance companies.

Lending continues with more stringent requirements

Capital Advisors Group fielded the five-question survey in early April to determine how specialty lenders are reacting to market disruptions caused by the COVID-19 pandemic. Lenders were queried on whether they are pursuing new deals and funding transactions already in the pipeline, if and how their underwriting philosophies have changed, if they are still traveling and meeting in person to close deals and, if not, whether they are finding alternative virtual communications options are sufficient.

Among the vast majority who are continuing to lend, most said they have adopted more conservative guidelines for lending. Comments from respondents indicated they are requiring that borrowers have plenty of cash on hand as well as supportive equity sponsors and strong enough balance sheets to raise additional equity and debt in the future.

Virtual transactions replace in-person meetings

When asked how disruptive the pandemic has been to their normal course of business, 77% stated more than somewhat disruptive, and 23% stated it has been extremely disruptive. Nearly all (94%) said they are no longer traveling for live meetings to close deals as they once did.

However, the survey also indicated that sheltering at home during the pandemic may be driving some acceptance of virtual deal-making. More than half of the respondents (58%) said video conferences and other means of communication are sufficient to close deals.

The biggest disruption in venture debt lending since 2008

Spazek said that while the COVID-19 pandemic has created a significant disruption in the venture debt marketplace, there is cause for hope that debt financing for growth companies will remain more readily available than in 2008.

“In 2008 and 2009, equity and debt markets virtually froze for the kinds of emerging growth companies we work with,” Spazek said. “But there is now far more capital in this space than there was then. And the COVID-19 crisis is not driven by the same kinds of fundamental breakdowns in the financial sector that we experienced during the credit crisis.

MissionOG Portfolio Company DivvyCloud Acquired by Rapid7 for $145 Million

MissionOG is pleased to announce the acquisition of portfolio company DivvyCloud by Rapid7 (ticker: RPD) for $145 million. The acquisition represents a great outcome for the DivvyCloud team, its investors, and the acquirer.

DivvyCloud broadens Rapid7’s product offerings to include infrastructure security and compliance. As Rapid7 CEO Corey Thomas stated, “We have been very impressed with the DivvyCloud team and its technology for some time. As the rate of cloud adoption continues to rise, the DivvyCloud platform will be an important part of our offering, giving customers a much deeper, comprehensive view into their cloud security posture.”

Founded by Brian Johnson and Chris DeRamus and headquartered in Arlington, Virginia, DivvyCloud provides automated policy enforcement for multi-cloud and container environments to help enterprises manage infrastructure cost, compliance, and security.

MissionOG first invested in DivvyCloud in October 2017 and participated in a subsequent growth round in April 2019. DivvyCloud’s business was well matched to a core investment theme that we have pursued – enterprises will continue to migrate workloads in mass to the cloud, creating great demand for tools to effectively innovate and manage their cloud infrastructure.

The exit from DivvyCloud marks the firm’s second successful investment outcome within the cloud infrastructure space with the prior being the acquisition of Cloudamize by Blackstone. We have been thrilled to watch DivvyCloud build a leadership position in a fast-growing market and remain excited about their future, now with Rapid7.

To learn more about the transaction, please see additional coverage on Venture Beat and ZDNet.

Anexinet Launches Innovative Identity & Access Management (IAM) Modernization Assessment

Program Analyzes Enterprise Identity Management Program and Provides a Roadmap to Modernize Policies, Procedures, and Tools 

Philadelphia, PA – April 21, 2020 – Anexinet Corporation, a leading provider of digital business solutions, today announced its new Identity & Access Management (IAM) Modernization Assessment. The IAM Modernization Assessment helps organizations better manage identities and control privileged access to sensitive data by identifying gaps in the IAM program and toolsets. Additionally, the assessment will provide an actionable roadmap to build a more robust identity management program. These issues are particularly relevant in the face of the Coronavirus and the remote workforce.

To learn more about preventing Ransomware attacks, Anexinet is holding a live webinar, Modernize Your IAM to Prevent Ransomware Attacks, Tuesday, April 28th at 9:00 AM EDT. Anexinet’s experts will explain how advanced IAM solutions dramatically reduce the attack surface to make remote workers less vulnerable. Webinar registration is available at https://bit.ly/3bwpeiJ.

Further, the prevalence of enterprise cloud and hybrid environments has made Identity and Access Management (IAM) more complex than ever before. Anexinet’s IAM Modernization Assessment provides comprehensive visibility into the overall Identity Management Program by compiling the business and technology requirements and analyzing whether existing policies, procedures, and tools are sufficient to achieve them.

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Guru closed a $30M Series C led by Silicon Valley’s Accel — yes, during a pandemic

Here’s how the Center City software company worked a relationship with the West Coast VC firm into its next round of fundraising, which is focused on expanding its customer base, CEO Rick Nucci told Technical.ly.

Written by Paige Gross, Technical.ly Philly

Amid a pandemic and subsequent recession, one of the best-case scenarios for a growth-stage company is to have a round in the bank, a venture capitalist will likely tell you.

Securing a round of fundraising now could buy a year or so of safety during unpredictable times for a biz looking to add employees, roll out a new product or simply survive unscathed during the next few months.

Guru Technologies, one of Center City’s steadiest-growing tech companies, announced Tuesday that amid one of the most suddenly challenging periods for local economies in recent history, it had just closed a Series C — a $30 million round led by Silicon Valley-based venture capital firm Accel, which has funded the likes of Facebook and Spotify.

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A Positive First Quarter; Market Pause Expected Ahead Due to COVID-19

Wayne, PA (04/16/2020)

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Newmark Knight Frank (NKF) released its first quarter 2020 industrial market reports for Greater Philadelphia and the I-81/78 Corridor. First quarter statistics are reflective of activity prior to the economic disruption stemming from the COVID-19 pandemic and reinforce that both industrial markets were on strong footing going into the crisis. Current market indicators suggest that repercussions related to COVID-19 are likely to be less severe for the industrial sector than for other property types, yet this market pause will likely affect leasing volume throughout the balance of the year, causing an uptick in vacancy and potentially a slight softening in rents.

Activity in the I-81/78 Corridor industrial market was robust in the first quarter, with 3.3 million square feet of net absorption tallied, numerous significant new leases signed and average asking rents growing 1.3 percent quarter-over-quarter. Multiple million-square-foot or larger occupancies occurred throughout the market. True Value and NFI occupied 1.0-million-square-foot build-to-suits in Northeastern Pennsylvania, Smuckers moved into a 1.1-million-square-foot warehouse in Central Pennsylvania and in the Lehigh Valley, Qurate Retail Group took occupancy of its newly expanded 1.7-million-square-foot fulfillment facility.

As school districts go virtual, a Malvern edtech company is stepping up

As millions of students and teachers make the massive shift to online learning amid the COVID-19 pandemic, administrators are left with a hefty task of their own — remotely managing all of the complex back-end operations that keep their schools running.

More than 80,000 schools nationwide use Malvern-based Frontline Education’s software, which has applications that allow districts to manage human resources, recruiting and hiring, professional growth, payroll, absence and time tracking, student information systems, special education requirements, school health operations and finances.

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Anexinet Receives Ten Consecutive Years of CRN’s Service Provider Accolades

Company Achieves 2020 Elite 150 Managed Service Provider Rank

 Philadelphia, PA – April 14, 2020 – Anexinet Corporation, a leading provider of digital business solutions, today announced that CRN®, a brand of The Channel Company, has named the company to its 2020 Managed Service Provider (MSP) 500 list in the Elite 150 category. The Elite 150 is made up of solution providers who have successfully established a large-scale managed-services portfolio focused on mid-sized and enterprise clients.

“MSPs are the critical bridge for customers looking to assess, implement and migrate their IT and cloud solutions to drive efficiencies, lower costs, and secure their environment,” said Bob Skelley, CEO of The Channel Company. “On behalf of our team at The Channel Company, I want to congratulate the accomplished companies on CRN’s 2020 MSP 500 list and thank them for their commitment to finding innovative solutions that move the IT channel forward.”

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IntegriChain Acquires the Life Sciences Division of Cumberland, Creating the Largest Data and Business Process Platform for Market Access and Commercialization of Specialty, Precision, and Retail Pharmaceuticals

Transaction Expands Customer Base to 220+ Life Sciences Manufacturers, including 20 of Top 20, and Team to 350+ 

Philadelphia, PA, April 13, 2020 – IntegriChain, a leading Life Sciences data and managed services company that helps drive access to life-saving and life-changing medicines, today announced that it has acquired Cumberland’s Life Science Division, a leading provider of managed services, advisory services and systems integration for contracts, pricing and revenue management. With this acquisition, IntegriChain delivers the Life Science industry’s most comprehensive and scalable data and business process platform for commercialization and market access of cell and gene therapy, specialty, and retail pharmaceuticals.

“This acquisition reinforces IntegriChain’s market-leading position to help manufacturers drive access and maximize their commercialization success throughout the brand life cycle, from pre-launch through growth,” said IntegriChain Co-Founder and CEO Kevin Leininger. “We now deliver the industry’s first and only data and managed services platform that unifies all of the critical business functions for commercialization and market access – contracts and pricing, gross-to-net, channel, and patient services – unlocking strategic payer, provider and pharmacy insights for our customers. As a result of this transaction, we are uniquely positioned to address critical therapy access challenges and ensure patients have access to specialty and precision medicines. We welcome all Cumberland Life Science consultants and professionals to our expanding global team as we continue to partner with our extensive combined customer base of more than 220 life sciences manufacturers to solve their access challenges.”

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