As companies choose to stay private for longer, the need for reliable, flexible financing solutions has only grown. However, businesses require a partner who intimately understands what kind of financing will help them meet growth targets and preserve equity value. Debt financing is critical in this rapidly changing landscape, as it allows companies to increase the probability of a successful liquidity event. This kind of financing can also safeguard stakeholder concerns and help companies maximize their enterprise value as they grow.
Venture debt finance caters to this growing segment, with specialized lenders that take on a higher level of risk for the possibility of higher returns. One such lender is SQN Venture Partners, which was founded in 2015 by Ryan McCalley and Nicholas Barnett, who collectively have almost four decades of experience in financing venture-backed emerging technology companies.
In approximately nine years since beginning operations, SQN Venture Partners has invested more than $300 million in early- and mid-stage transformative companies, creatively applying alternative debt financing structures to help these startups achieve their growth goals. The entirety of this amount has been invested by SQN Venture Partners without the use of leverage, diligently raising the money from homegrown individual and institutional investors.
According to the founders, SQN Venture Partners serves as a valuable conduit for entities that believe in its strategy of financing innovative companies domestically in the US.
The company’s name borrows from Sine Qua Non, a Latin legal term that means “without which it could not be,” referring to an indispensable and essential action, condition, or ingredient. The name embodies SQN Venture Partners’ mission to be indispensable and essential for businesses, entrepreneurs and investors through providing financing and investment opportunities focused on senior-secured, growth capital, and business essential equipment transactions.
Barnett says that SQN aims to be a strategic financing partner for companies to grow and reach or exceed their goals. He adds that this is different from typical bank lending, which can be volume-based and more risk-averse, with more restrictive financing terms.
Despite the risks, SQN Venture Partners has worked with companies that have eventually achieved significant liquidity events, whether through mergers and acquisitions or public listings. Around 20% of the companies SQN Venture Partners has financed have experienced these liquidity events, well above the industry average of 10% for venture capital-backed companies.
“Less than a decade into its existence, SQN Venture Partners has been able to surpass a major milestone of $300 million invested,” Barnett says. “However, we strive to keep our heads down and continue working towards better deployment of capital. We are grateful to the wealth management community, investor partners, and limited partners who have trusted us, and we will continue being good stewards of the capital that we are investing. Aside from the financial returns, we are also chasing what we call ‘satisfaction currency’, which is the satisfaction we feel when a company succeeds with the financing we provided, potentially creating a world-changing solution with their innovative business model.”
