Unveiling Growth Equity: Episode Four

Unveiling Growth Equity: Episode Four
17 june 2024
We often invest in portfolio companies using structured growth equity. We combine expertise with innovative financial instruments to help companies optimize their capital structures, reduce costs, and achieve ambitious growth.

Welcome to our fourth episode of BlackPeak Capital Unveiling Growth Equity, a short video series where our private equity professionals delve into how growth equity functions and how it can assist ambitious founders in propelling their companies.

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The Benefits of Structured Financing

One of the keyways a company can benefit through structured financing is by optimizing its capital structure and finding the right financial instrument tailored to its specific needs. At BlackPeak Capital, we often invest in portfolio companies using structured growth equity. Our main objective in structured instruments is to incentivize founders. We frequently employ earnout structures, giving founders the opportunity to reclaim additional shares if they meet specific milestones, thereby increasing their stake and the company's overall valuation at exit. We also use debt-like instruments, like mezzanine financing and convertible debt, to reduce founder dilution and ensure that they stay with a relatively larger stake in the company.



Tailored Solutions for Unique Needs

Our value proposition lies in our ability to understand the unique financing needs and expectations of company founders. We tailor our financial solutions to meet these specific requirements, enabling companies to optimize their capital structures. By combining different instruments, such as equity and hybrid instruments like mezzanine or convertible loans, we help reduce the average cost of capital for our portfolio companies.


Real-World Applications

Let's look at some real-world examples of our approach to action. In one instance, we invested in a company where there was initially a significant gap in valuation expectations and concerns about the timing and nature of the exit. By offering the founder an earnout structure, we bridged this gap. This allowed the founder to earn back shares upon exceeding certain performance milestones, aligning our interests and driving growth.

In another case, we initially invested in a company through preferred equity. When the company needed additional capital for accelerated growth, we switched to a mezzanine-type instrument with warrants, which was more cost-effective. This flexibility to adapt our financing approach based on the company's evolving needs was highly appreciated by the founders and exemplifies our commitment to finding the right instrument for every situation.



At BlackPeak Capital, we pride ourselves on our flexible and tailored approach to structured financing. By combining our expertise with innovative financial instruments, we help companies optimize their capital structures, reduce costs, and achieve their growth ambitions. Stay tuned for more insights in our next episode of BlackPeak Capital Unveiling Growth Equity.

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