Spring Capital invests in a broad range of industries with a geographic focus on companies and equity sponsors located in the eastern half of the United States.
Investment Criteria
In evaluating a company we look for the following qualities:
- a proven management team with a significant equity stake,
- strong products and market positions, and;
- profitable and predictable financial performance.
Spring Capital invests in small and medium sized companies, with annual revenue in the range of $10 million to $150 million and strong projected earnings growth. While most investments are made to mature companies with institutional equity sponsorship, we also make investments in "late stage venture" companies. Additionally, we make investments in "unsponsored" companies with strong management teams that have proven track records and considerable equity stakes.
Investment Purpose
A Spring Capital investment will generally be used for the following purposes:
- strategic acquisitions of existing business,
- management or leveraged buyouts,
- later-stage growth or expansion capital, or;
- recapitalizations to create liquidity for founders, management teams or family members.
Investment Structure
A typical Spring Capital financing is $2 million to $7 million in size, in the form of subordinated debt with detachable warrants to purchase common stock. Larger commitments can be provided through co-investments with other mezzanine lenders. The debt typically has a five-year term, at a fixed rate of interest. We may also purchase equity securities in conjunction with a subordinated debt investment.
Repayment
Spring Capital expects to be repaid through a company’s internal cash generation but understands that prepayment may occur through a senior debt refinancing. Some portfolio companies will decide to sell or raise equity through a private placement or an initial public offering. Unlike an outside equity investor, however, we do not depend on such outcomes for repayment.
The Value of a Spring Capital Relationship
We believe that Spring Capital offers the following distinct advantages to companies in need of expansion and acquisition capital:
- Financing. As a Small Business Investment Company (SBIC) licensed by the U.S. Small Business Administration, Spring Capital is able to offer financing on attractive terms unavailable from other kinds of providers.
- Expertise. Spring Capital’s broad expertise in venture capital, commercial banking, investment banking, operating management, and entrepreneurship is a valuable resource for companies making critical strategic decisions.
- Philosophy. The principals have spent their careers financing and advising small and medium-sized companies. Our philosophy is that an investment by Spring Capital is a relationship, not just a transaction.
