When companies find themselves in a stage of accelerated sales growth, cash flow usually becomes a major problem.  Unforecasted sales, while greatly wanted, can put a strain on working capital and potentially create a range of cascading problems.

The fast growing, cash constrained portfolio company may first turn to their commercial lender for an increased facility to help support their growth.  But even fast growing, successful companies reach a limit for raising capital.

The senior lender may not increase the company’s facility without an additional equity infusion or, at the very least, until the company attains more substantial bottom line results.

Desperately in need of funding, the company will logically turn to existing investors for an equity infusion to support sales growth.  Since it can potentially require a long-term investment to solve a short-term problem or divert cash that can used for other investments, many venture capital firms and equity sponsors are not receptive to these requests.  Bringing in new investors will generally dilute existing investor’s positions — an equally unsatisfactory solution.

Transcap’s VC-TC program allows you to help one of your portfolio companies out of a cash flow jam, without having to infuse more capital or diluting your equity position.