Traditional financing for growth-stage businesses usually requires you to give up significant equity or take on covenant and guarantee requirements.
Momentus Capital’s Impact Investments team offers businesses and organizations financing options that are more flexible and align with the performance of the business.
We offer two types of non-dilutive funding: preferred equity and revenue-based financing (mezzanine debt).
At Momentus Capital, our Impact Investments team provides flexible, non-dilutive funding to growth-stage, mission-driven businesses. Unlike traditional equity investors, we prioritize capital solutions that empower entrepreneurs without requiring you to give up ownership or accept restrictive covenants or guarantee requirements.
Whether your company is growing through innovation, market expansion, or even through acquisition, our Impact Investments team offers two unique non-dilutive financing options for growth capital:
Profit Share Preferred Equity; and
Revenue Share Mezzanine Debt
At Momentus Capital, we offer you a continuum of capital with comprehensive financial solutions for entrepreneurs, developers, community-based organizations, and partner lenders — supporting you at every stage of your growth.
Through our Impact Investments offering, we utilize alternative financing to support for-profit, growth-stage companies owned by community-rooted entrepreneurs or owners with a strong community presence.
What is non-dilutive funding?
First, it’s important to define what non-dilutive funding does. It allows you to raise capital without giving up ownership or equity in your company. Unlike traditional loans that require fixed payments regardless of your company’s performance, or venture capital that requires you to give up partial ownership – and with it, some say control over your company – non-dilutive financing is an alternative option that prioritizes impact and aligns with your success. To support your growth, especially if you have a strong community presence, we offer non-dilutive financing options in the form of profit share preferred equity and revenue share mezzanine debt. Each investment option serves differently depending on your business needs.
Momentus Capital’s investment of $1.5 Million in profit share preferred equity provided QualityWorks with the growth capital it needed. Stacy Kirk, CEO of QualityWorks, is happy with the results. “Collaborating with them has truly felt like a partnership. The capital they provided has enabled us to enhance our brand recognition, assemble a world-class business development team, and expand our AI capabilities which now makes technical solutions affordable to SMBs and Social Impact organizations.”
Profit Share Preferred Equity: Investing in Long-Term Success
Profit share preferred equity differs significantly from traditional equity options. Essentially, instead of gaining a partner that takes an ownership stake in your company, you gain an investor focused on your long-term success.
Instead of relinquishing a larger degree of control, you receive growth capital in return for a percentage of profits and dividend payment. When a pre-determined multiple on the investment is achieved, the shares are redeemed. Additionally, while the investment targets a three-to-five-year holding period there is no fixed term.
To Qualify
Your company must have a minimum revenue of $4 million and have proven profitability.
Momentus Capital invested in Montee Holland, CEO of the Tayion Collection, utilizing revenue share mezzanine debt. “Montee was impressive,” said Elisabeth Chasia, investments director for the Momentus Capital branded family of organizations. “He’d built Tayion largely on his own and already demonstrated a high level of success. He was a perfect fit.” (Photo by Ara Howrani)
Revenue Share Mezzanine Debt: A Flexible Repayment Option
Revenue share mezzanine debt offers a different approach. With this option, you pay a percentage of your company’s revenue, plus a fixed interest payment. This revenue-based option means that when your business is thriving, your repayments are higher, and when things slow down, they are lower. This flexibility makes it distinct from traditional debt which requires you pay fixed monthly or quarterly payments. It is particularly beneficial for your business if you have fluctuating or seasonal cash flow.
Revenue share mezzanine debt has a three-to-five-year term with a set maturity date. This is a crucial difference from our equity product. That provides a clear timeline for both you and us – a set end date – where the principle and any remaining interest/revenue share payments are due. Furthermore, since this option does not allow for business collateral or personal guarantees, it protects both your business assets and your personal assets.
To Qualify
Your company must have a minimum revenue of $4 million and a positive cash balance.
Choosing the Right Non-Dilutive Funding
Selecting the right growth capital option depends on your specific needs and circumstances. While both of our non-dilutive financing options help local businesses like yours grow, the real impact is in keeping wealth within your community.
Profit share preferred equity is an alternative lending option best suited for businesses expecting long-term profitability and stability. It gives you the ability to invest in growth without the burden of fixed debt payments or dilution of ownership.
Revenue share mezzanine debt is ideal if your business has fluctuating cash flow. This revenue-based financing allows your repayments to adjust with revenue, offering you flexibility and peace of mind.
Here’s a quick comparison of the key points you should consider:
Profit Share Preferred Equity
Revenue Share Mezzanine Debt
Ownership
Ownership
No loss of control, non-dilutive
No ownership stake given
Repayment
Repayment
Percentage of profits + fixed dividend
Based on long-term profit share
Percentage of revenue + fixed interest
Based on revenue percentage
Cash flow impact
Cash flow impact
Flexible, dependent on profit
Flexible, tied to revenue
Term
Term
3-5 year holding period with no predetermined maturity date
3-5 year maturity date
Key benefit
Key benefit
No fixed debt payments
Repayments adjust with revenue
Best for
Best for
Steady, profitable businesses
Fluctuating, strong cash-flow companies
At Momentus Capital, we’re committed to investing in local impact and supporting community-centric businesses. Our Impact Investments team offers these alternative financing options to help your business achieve its goals without the constraints of traditional funding.
Every business is unique, and we work with you to find the best solution for your specific needs. Whether that solution is a Community Development loan, an Impact Investment, an SBA loan, or a combination of any of these, we can help.
2022 is a special year for us at Capital Impact Partners as it marks our 40th anniversary. Four decades of leaning into helping people build communities of opportunity and developing pathways to success.
And while this is an exciting time for us as we embark on a new strategy under Momentus Capital, it is equally important to remember our roots as a champion for the cooperative movement.
Abner Mason came up with the idea for SameSky Health in 2013 with a dream of creating a company that is on a mission to advance health equity. From its inception, SameSky Health has been focused on engaging and helping Americans who are marginalized or under-resourced.
To advance that mission, Mr. Mason worked with Momentus Capital, a family of mission-driven organizations that includes Capital Impact Partners, CDC Small Business Finance, and Momentus Securities. Through our impact investing program, SameSky Health received a $5 million venture debt bridge loan to support the growth of the company. We talked to Abner about how this investment is helping SameSky Health in its efforts to address a significant market challenge to help disinvested communities get guidance and navigate a complex health care system.
Q: What do you feel you have achieved the most since starting the company?
Abner: I’m very passionate about the mission of SameSky Health, to create cultural connections for a healthier, more equitable world. I feel fortunate to have built a company where people who are just as passionate as I am about our mission have joined the organization. We’ve built a team of incredibly talented people who are focused on creating a solution that enables equitable health care.
Health equity is at the center of everything SameSky Health does. We have established ourselves as a leading health equity company. We are focused on raising the bar in America for health equity and how we should treat the people we are trying to help navigate our complex health care system.
We have built a leading, scalable health equity technology platform, unlike no other, that enables health plans and other health care stakeholders to comply with new health equity-related requirements that they will have to comply with now and in the future.
Q: The need for funding means that you’ve achieved a certain amount of growth. What challenges/barriers have you faced in terms of attaining funding for SameSky Health?
Abner: One of the major challenges I have run into over the course of my career is trying to raise money as a founder of color. I am optimistic about the future, as I have seen great progress being made from investors in startups supporting new businesses founded by people of color, which has more than doubled since 2020.
Another challenge I have faced in the past is gaining support from investors to raise funds for a solution that addresses low-income, underserved communities, particularly those people who are enrolled in Medicaid. Up until recently, venture capitalists did not understand the Medicaid market or the extraordinary need for advancing health equity. I am very optimistic about the traction in investment and innovation in this space over the past two years to help address health disparities.
Q: Momentus Capital, however, is able to offer something that hopefully can make an impact with a lower risk. Any thoughts on that relationship so far?
Momentus Capital is essential for a company like SameSky Health. The company played a crucial role in helping SameSky Health secure bridge funding as we progress to raise our Series C funding, which is the next step. We are deeply grateful for their flexibility and support of SameSky Health.
Momentus Capital is essential for a company like SamSky Health. [They] played a crucial role in helping us secure bridge funding.
– Abner Mason, Founder & CEO SameSky Health
Q: Why did you choose Momentus Capital versus another investor? What was the difference maker for you?
Abner: It was clear to us that Momentus Capital values working with partners to impact change in the health care system and drive health equity. This aligns well with our values and mission. Their approach allowed us to easily structure a deal that was fair to everyone given our alignment around advancing health equity. Momentus Capital stands out from others for their flexibility in working with our team and their ability to quickly move toward a transaction to help us continue scaling and driving equity in health care.
Q: How do you think SameSky Health improves the lives of people in the community through health care, and how does proper investment into funding drive these positive aspects?
Abner: SameSky Health has built an innovative solution that combines technology and human touch to deliver a culturally tailored, personalized experience to members of health plans. If the health care industry continues to try to address challenges the same way they always have, we’ll never achieve better outcomes. Innovation and investment in health care IT innovations are so important. Investors need to support startups that are building solutions that will meet the needs of low-income, underserved communities. Investors need to be more proactive in seeking opportunities to work with companies such as SameSky Health.
The idea of “community” often conjures images of a geographic place, a shared space where people congregate. While true, communities can be so much more. Their true potential can manifest itself when they foster connections between individuals who share mutually beneficial ideals. Through championing those shared values, community members can create a future of shared prosperity.
More than Money Podcast Interviews Ellis Carr, President & CEO of Capital Impact
Expanding opportunities for residents in low-income communities is the focus of community development financial institutions (CDFIs). These mission-driven institutions prioritize social, economic and racial justice for underserved communities over and above profits, meaning that CDFIs invest in places and projects that traditional lenders are often reluctant to support.
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