Featured Company /
TIMIA Capital Corp.
In an ever-increasingly digital world, Software as a Service (SaaS) is a thriving business that keeps building upon itself with technological advances and new offerings filling any gaps while offering new and improved solutions. Against this backdrop, global brand and consulting firm KBV Research forecasts the SaaS market to grow at a 21.4% compound annual growth rate to reach $185.8 billion by 2024.
To get a piece of this space, investors need to consider many things. For example, is the goal slow and steady growth through a major like Amazon (NASDAQ:AMZN) with its popular AWS service? Most investors want exposure to “the next big thing,” meaning upstart companies that are following strong growth trajectories. For the most part, this means young public companies because private companies are usually out of reach for typical retail investors.
That is, unless investors look to a company like TIMIA Capital Corp. (TSX-Venture:TCA) (OTCPK:TIMCF), a specialty finance company that provides growth capital to technology companies in exchange for payments based on monthly revenue. TIMIA’s model is focused on working with small to medium size private software companies.
This is no “niche” market; it is a huge market chock full of bright entrepreneurs leading innovative companies that are in need of capital to keep up with demand or expand. To be clear, finding financing is one thing, finding good financing is completely different. Toxic financings, or “death spirals” as they’re sometimes called, are a dime a dozen as bad actors posing as interested investors take advantage of naïve companies with limited financing options. No matter what these funds say, they’re mostly in the business of selling stock for their own profits, with the best interest of the investment company a distant second.
That’s not the TIMIA model. TIMIA’s highly-experienced team looks for promising technology companies that will deliver a return on investment by continuing to grow. TIMIA advances capital to a SaaS business with a recurring revenue stream in a flexible and non-dilutive manner that allows the portfolio company to make monthly payments to TIMIA that are a combination of principal and interest with a repayment schedule sculpted to the portfolio company's revenue streams. The amounts advanced are secured and may be repaid early.
In short, the model effectively provides loans that have security protection on the downside and cash participation on the upside when companies are either bought or pay out the loan early, an arbitrage of sorts that benefits TIMIA and its shareholders both ways, but more so if the investment or portfolio company is successful.
TIMIA’s management, which is steeped with angel investors, Venture Capital players and C-suite executives, has a particular sweet spot for investments where companies most need funds as they’re in the midst of a growth spurt. At this point, where revenue is growing 20%-100% annually, yet still beneath $10 million, companies are a bit too advanced for angels, too early for traditional banks and still a little too small for VC.
According to TIMIA , the market for companies falling into their target demographic is growing rapidly, with a potential loan book of $14 billion across more than 7,000 companies in the U.S. and Canada. With this large of a market, TIMIA can literally cherry pick the best opportunities.
This model and confidence leadership has in it likely underscores why management is holding about 40 percent of outstanding shares of TIMIA.
The acumen to pick the right investments are showing through for TIMIA. To date, the company has successfully executed four early exits to investments (Lambda Solutions, QuickMobile, iCompass and Rise) since inception in 2015, with the 2018 exits generating more than $1.5 million in additional revenue. To wit, the company’s total investment and related income for 2018 increased by roughly 60 percent to approximately $1.6 million, up from $1.0 million in 2017.
Moreover, the rate of investing has accelerated for TIMIA, which made eight new investments in 2018 compared to five in 2017. 2018 was also a milestone year for TIMIA with the first investment made in a U.S. company, Real Savvy, during the fourth quarter. In October, TIMIA completed a $2.5 million financing for the company that provides custom websites for real estate brokers and agents.
2019 is keeping the expansion pace going, including the completion of a $3.0 million financing agreement for Sausalito, California-based software company, Karbon Inc. Per the deal, Karbon, which is an advanced workstream collaboration platform integrated with email, was advanced $1.0 million upfront, with the other $2.0 million to be distributed upon the company meeting certain milestones going forward.
That was followed this month by TIMIA entering a three-year, $2.0 million investment facility for Vancouver-based BasicGov Systems, a provider of a comprehensive cloud-based operations management platform for governments of all sizes built on the Salesforce.com platform. This agreement included the full $2.0 million to BasicGov upfront to accelerate revenue growth, which is already growing at a 40+% clip.
In only a few years, TIMIA has successfully executed on its revenue financing model, already hovering around breakeven, with some quarters posting a profit and others a small net loss. The Vancouver-based firm ended the third quarter (ended August 31, 2018) with more than $5.0 million in cash and added to those coffers in December via a $1.35 million private placement to further its investment efforts.
As the company continues to build its portfolio, it should start to steadily grow its annual profits, while giving the general investment community exposure to vetted upstarts that normally would be out of reach. Given the cash position and the secure investments in more than a dozen portfolio companies, there does seem to be a bit of a disconnect between the fundamental strengths and TIMIA’s market capitalization of just C$6.4 million, a disconnect that likely will be corrected as management continues to prove its savvy in making sound investments.
Corporate Snapshot:
TIMIA Capital Corp.
Stock Symbol:
CA
Stock Exchange:
TSX-Venture
Sector:
Financial Services
52 Week High:
$0.2100
52 Week Low:
$0.1300
Alt Exchange/Ticker:
OTCPK:TIMCF
Current Stock Quote / Chart / News: Click here
Information as of
March 10, 2019
In an ever-increasingly digital world, Software as a Service (SaaS) is a thriving business that keeps building upon itself with technological advances and new offerings filling any gaps while offering new and improved solutions. Against this backdrop, global brand and consulting firm KBV Research forecasts the SaaS market to grow at a 21.4% compound annual growth rate to reach $185.8 billion by 2024.
To get a piece of this space, investors need to consider many things. For example, is the goal slow and steady growth through a major like Amazon (NASDAQ:AMZN) with its popular AWS service? Most investors want exposure to “the next big thing,” meaning upstart companies that are following strong growth trajectories. For the most part, this means young public companies because private companies are usually out of reach for typical retail investors.
That is, unless investors look to a company like TIMIA Capital Corp. (TSX-Venture:TCA) (OTCPK:TIMCF), a specialty finance company that provides growth capital to technology companies in exchange for payments based on monthly revenue. TIMIA’s model is focused on working with small to medium size private software companies.
This is no “niche” market; it is a huge market chock full of bright entrepreneurs leading innovative companies that are in need of capital to keep up with demand or expand. To be clear, finding financing is one thing, finding good financing is completely different. Toxic financings, or “death spirals” as they’re sometimes called, are a dime a dozen as bad actors posing as interested investors take advantage of naïve companies with limited financing options. No matter what these funds say, they’re mostly in the business of selling stock for their own profits, with the best interest of the investment company a distant second.
That’s not the TIMIA model. TIMIA’s highly-experienced team looks for promising technology companies that will deliver a return on investment by continuing to grow. TIMIA advances capital to a SaaS business with a recurring revenue stream in a flexible and non-dilutive manner that allows the portfolio company to make monthly payments to TIMIA that are a combination of principal and interest with a repayment schedule sculpted to the portfolio company's revenue streams. The amounts advanced are secured and may be repaid early.
In short, the model effectively provides loans that have security protection on the downside and cash participation on the upside when companies are either bought or pay out the loan early, an arbitrage of sorts that benefits TIMIA and its shareholders both ways, but more so if the investment or portfolio company is successful.
TIMIA’s management, which is steeped with angel investors, Venture Capital players and C-suite executives, has a particular sweet spot for investments where companies most need funds as they’re in the midst of a growth spurt. At this point, where revenue is growing 20%-100% annually, yet still beneath $10 million, companies are a bit too advanced for angels, too early for traditional banks and still a little too small for VC.
According to TIMIA , the market for companies falling into their target demographic is growing rapidly, with a potential loan book of $14 billion across more than 7,000 companies in the U.S. and Canada. With this large of a market, TIMIA can literally cherry pick the best opportunities.
This model and confidence leadership has in it likely underscores why management is holding about 40 percent of outstanding shares of TIMIA.
The acumen to pick the right investments are showing through for TIMIA. To date, the company has successfully executed four early exits to investments (Lambda Solutions, QuickMobile, iCompass and Rise) since inception in 2015, with the 2018 exits generating more than $1.5 million in additional revenue. To wit, the company’s total investment and related income for 2018 increased by roughly 60 percent to approximately $1.6 million, up from $1.0 million in 2017.
Moreover, the rate of investing has accelerated for TIMIA, which made eight new investments in 2018 compared to five in 2017. 2018 was also a milestone year for TIMIA with the first investment made in a U.S. company, Real Savvy, during the fourth quarter. In October, TIMIA completed a $2.5 million financing for the company that provides custom websites for real estate brokers and agents.
2019 is keeping the expansion pace going, including the completion of a $3.0 million financing agreement for Sausalito, California-based software company, Karbon Inc. Per the deal, Karbon, which is an advanced workstream collaboration platform integrated with email, was advanced $1.0 million upfront, with the other $2.0 million to be distributed upon the company meeting certain milestones going forward.
That was followed this month by TIMIA entering a three-year, $2.0 million investment facility for Vancouver-based BasicGov Systems, a provider of a comprehensive cloud-based operations management platform for governments of all sizes built on the Salesforce.com platform. This agreement included the full $2.0 million to BasicGov upfront to accelerate revenue growth, which is already growing at a 40+% clip.
In only a few years, TIMIA has successfully executed on its revenue financing model, already hovering around breakeven, with some quarters posting a profit and others a small net loss. The Vancouver-based firm ended the third quarter (ended August 31, 2018) with more than $5.0 million in cash and added to those coffers in December via a $1.35 million private placement to further its investment efforts.
As the company continues to build its portfolio, it should start to steadily grow its annual profits, while giving the general investment community exposure to vetted upstarts that normally would be out of reach. Given the cash position and the secure investments in more than a dozen portfolio companies, there does seem to be a bit of a disconnect between the fundamental strengths and TIMIA’s market capitalization of just C$6.4 million, a disconnect that likely will be corrected as management continues to prove its savvy in making sound investments.
Forward Looking Statements
This report includes forward-looking statements that reflect current expectations about its future results, performance, prospects and opportunities. TIMIA Capital Corp. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause TIMIA Capital Corp.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.
Disclaimer
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