Vancouver-based accounting software company Beanworks has closed a $4.5-million round of funding.
The company, which was founded in 2008, says the cash injection will help fund its growth in the wake of its recent partnership with Sage Accounting, which is meant to modernize the accounts payable process for companies. A chunk of the money Beanworks raised was courtesy TIMIA Capital (TSXV:TCA), a Vancouver-based pubco with an innovative model of its own.
TIMIA, which began operations just two years ago, has now made five investments. The fund, which makes debt investments into software companies that are growing their revenue and then uses payments from investee companies to pay out investors, says Beanworks is a model of the kind of situation it looks for.
“Beanworks is an exciting new investment for TIMIA Capital,” says CEO Mike Walkinshaw. “They make accounts payable delightful by automating the recording and payment processes. The company has shown strong growth over the past year and we are looking forward to continued strong growth into the future. Their recently announced partnership with Sage, the world leader in small and medium size accounting systems will allow them to access new markets, previously unavailable to them as a small Vancouver company. TIMIA’s capital will fuel their growth and allow their management and shareholders to retain a larger stake of their company than if they had raised only equity.”
Beanworks own press described the investment from TIMIA as a “Series A” investment. While many will imply equity from that description, TIMIA’s model is solidly debt based. TIMIA will extend a $2-million facility to Beanworks and has advanced the fist $500,000 of that. To access the rest of the facility, Beanworks will need to meet certain revenue milestones. Walkinshaw say this limits the risk for TIMIA and its investors, and improves the risk to reward ratio over the life of the full facility, resulting in even higher returns for TIMIA investors through buyout clauses and warrant gains.
TIMIA earns 20 per cent annual interest its loans, plus transactions fees.
Beanworks joins Quickmobile, iCompass, Lambda, and Predictable Revenue as TIMIA investments. The company had invested $4.25-million in the first four. Walkinshaw estimates that about 30 per cent of TIMIA’s portfolio will achieve an exit during the term of the company’s investment, either through a sale or an IPO.
Shares of TIMIA Capital closed today even at $0.13.
Disclosure: TIMIA Capital is an annual sponsor of Cantech Letter.