Disclaimer: Mean Earnings Estimates are calculated by Factset based on the earnings projections made by the analysts who cover Hercules Technology Growth Capital and provide their research to Factset. Please note that any opinions, estimates or forecasts regarding Hercules Technology Growth Capital's performance made by these analysts (and therefore the Mean estimate numbers) are theirs alone and do not represent opinions, forecasts or predictions of Hercules Technology Growth Capital or its management. Hercules Technology Growth Capital does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.
Hercules provides innovative debt financing solutions to high-growth technology companies, including cleantech and life sciences to help achieve critical milestones throughout all stages of development from seed and emerging growth to expansion and established stages of development, which include select publicly listed companies and lower middle market companies.
Hercules provides customized financing solutions designed to serve the evolving needs of high growth technology-related companies throughout all stage of development. Typically, our structured debt and equity investments take one of the following forms: structured debt with warrants, senior debt, equipment loans and equity-related securities. We invest primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. We use the term "structured debt with warrants" to refer to any debt investment, such as a senior or subordinated secured loan, that is coupled with an equity component, including warrants, options or rights to purchase common or preferred stock. Our structured debt with warrants investments will typically be secured by select or all of the assets of the portfolio company.
Hercules' strategy is to evaluate and invest in a broad range of technology-related companies including clean technology, life sciences and lower middle market companies and to offer a full suite of growth capital products up and down the capital structure. Hercules invests primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments.
Hercules' goal is to be the leading structured debt financing provider of choice for venture capital and private equity-backed technology-related companies requiring sophisticated and customized financing solutions.
Our investment professionals, including Manuel A. Henriquez, our co-founder, Chairman, President and Chief Executive Officer, have, on average, more than 15 years of experience in venture capital, structured finance, commercial lending or acquisition finance with the types of technology-related companies that we are targeting. Under Manuel's leadership, the firm has completed investments of more than $2.7 billion to over 190 companies.
Hercules invests in companies active in technology industry sub-sectors characterized by products or services that require advanced technologies. These include:
Venture debt is a type of debt financing provided to venture capital and private equity-backed companies to fund working capital or operating expenses. Venture leasing, or equipment financing, is a specific type of venture debt which is used to purchase equipment, land and other tangible assets. Unlike traditional bank lending, venture debt is available to startups and growth companies that do not have positive cash flows or significant assets to use as collateral. Venture debt providers combine their loans with warrants, or rights to purchase equity, to compensate for the higher risk of default.
Hercules provides venture debt financing to technology-related companies at all stages of development, including seed and emerging growth companies, expansion and established stage companies, including select publicly traded companies and lower middle market companies, enabling them to reach key growth milestones, often minimizing dilution and without sacrificing valuation.
Venture debt is designed to complement traditional venture capital funding, and offers a number of important benefits to entrepreneurs:
Lowers total cost of capital to the company and often minimizes dilution;
Has little to no impact on valuation of the company at the time of financing;
Provides additional capital needed to reach important product development milestones to enable the company to enter the next fund raising event with potentially higher valuation;
Allows the company to manage timing of its equity rounds to benefit shareholders
Is much faster to implement than an equity round, and with lower completion risk.
The firm invests in technology-related companies at all stages of development, with the capacity to underwrite transactions of up to $30 million depending on stage and risk profile.
In 1958, Congress created the Small Business Investment Company ("SBIC") program to fill the gap between the availability of venture capital and the needs of small businesses in start-up and growth situations. According to the National Association of Small Business Investment Companies since its inception in 1958 the SBIC program has provided $46 billion in financing to almost 100,000 small US companies.
SBICs are licensed by the Small Business Administration and are privately organized and managed investment firms/funds. They are participants in a vital partnership between government and the private sector economy. With their own capital and with funds borrowed at favorable rates through the federal government, SBICs provide venture capital to small independent businesses, both new and already established.
SBICs are generally organized and operated like any other venture capital, mezzanine or private equity fund. There are, however, a few notable exceptions. Unlike traditional funds, SBICs receive up to approximately two-thirds of their total capital from the SBA. In return, an SBIC must invest in "Small Businesses" as defined by the SBA, abide by a body of regulations and submit to annual regulatory and operational examinations.
Small businesses which qualify for assistance from the SBIC program are able to receive equity capital, long-term loans, and expert management assistance. Investment managers participating in the SBIC program can supplement their own private investment capital with funds borrowed at favorable rates through the federal government. Most importantly, the Nation's economy benefits from the program as the small businesses financed by SBICs continue to create hundreds of thousands of jobs and generate tax revenues over the program's life.
Hercules makes investments in qualifying small businesses through two wholly-owned, small business investment company ("SBIC") subsidiaries, Hercules Technology II, L.P. ("HT II") and Hercules Technology III, L.P. ("HT III").
Business development company (BDC) regulation was created in 1980 by Congress. The goal of BDC regulation was to encourage the flow of public equity capital to private businesses in the United States. To qualify as a BDC, companies must be registered in compliance with Section 54 of the Investment Company Act of 1940. They are required to report to shareholders like traditional operating companies, file regular quarterly and annual reports with the SEC, and are required to make available significant managerial assistance to their portfolio companies. By investing in a BDC, shareholders enjoy the liquidity of a publicly traded stock, while participating in the private equity industry.
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