Tag: debt

07
Oct
2020
Posted in technology

Why the CEO of a $1 billion startup chose debt capital over VC funding

  • In February, Quantum Metric CEO Mario Ciabarra was fielding calls from investors at a rapid clip and getting unsolicited term sheet offers that valued the company at $1 billion. 
  • The term sheets offers slowed once the coronavirus hit but his company kept booming, growing annual recurring revenue at 70%, he told Business Insider.
  • By June, VCs were calling again, but the valuations were lower, even though revenue-under-contract had grown, said Ciabarra. 
  • So he decided not to take on a new round of funding yet. Instead, he opted for a $25 million loan from Silicon Valley Bank until he could secure a venture funding round at the terms he wants.
  • Visit Business Insider’s homepage for more stories.

In February, Quantum Metric CEO Mario Ciabarra was fielding calls left-and-right from venture capitalists eager to pour funding into the company.

“We weren’t actually trying to raise any specific amount of money,” he told Business Insider. “Of course, we entertain conversations cause it’s great to get to know folks. And we started getting term sheets that were unsolicited.”

Investors were also valuing the young startup at roughly $1 billion, he said. That’s an eye-popping valuation for a company that launched in 2011, especially considering that Quantum Metric’s last funding round was a $25 million Series A just two years ago that pegged the firm’s worth at $125 million, according to an estimate from Pitchbook. 

In March, once the pandemic brought much of the globe to a grinding halt, those offers began to stop trickling in at the same pace. But then in June, when Quantum Metrics got a new round of solicitations, Ciabarra said the valuations weren’t as high.

This was particularly baffling to Ciabarra because he says business is booming in 2020. Quantum Metric is experiencing 70% growth in annual recurring revenue, an