HIGHLIGHTS

Traction

- $15.5M ARR

- 3x YoY growth in 2023

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Founders

- Robbie Bhathal (CEO, co-founder): repeat founder with over a decade of startup experience and deep sector expertise in fintech & financial innovation

- Jeffrey Priebe (CTO/CPO, co-founder): 15+ years of product & engineering experience across Fortune 500 companies and within AI/big data  

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Raise & Terms

- $10M Convertible Note (20% discount @$80M cap ($15M Series A was @$60M post))

- $30M Series B starting next month ($100M+ valuation)

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Investors

- Haymaker‍

- Bonfire‍

- SBI Holdings

- Greycroft (previous round)

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MEMO

The Company is growing incredibly fast, scaling from $580k in Consolidated Revenues in 2021 → $6.8M in 2022 → $15.5M est. in 2023 with projections to reach $52.8M in 2024. At our entry price of $80mm valuation cap, we’re investing at an extremely attractive ~1.5x 2024E Consolidated Revenues. Additionally, the Company’s fueled growth effectively, spending only $500k on digital marketing and sales to date on customer acquisition.

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We’ve spoken in depth about getting meaningful value in bridge rounds and we believe this is one of them. Despite the Company’s strong progres from the Series A, we’re investing at only a small step up to the $60M post-money valuation of that Series A. The Company intends to go out for a large Series B in 2024.

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Financial intelligence and operating software continues to be one of the strongest spots of the markets. There have been multiple large exits in the space, including Thoma Bravo’s acquisition of Anaplan for $10.7B in 2022 and Workday’s acquisition of Adaptive Insights for $1.5B in 2018 with the space maintaining some of the highest SaaS multiples.

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We’re co-investing alongside insiders (and new investors) who are doubling down ahead of the Series B including Haymaker (Netomi, SpaceX, Flyr, Gusto), Bonfire (Writer, Outreach) & SBI Holdings (Ripple, eToro, Pipe), among others.

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DEAL

This is a $8M convertible note at a $80M cap with a 20% discount.The founders plan to raise their Series B round in 2024, so this is an opportunity to invest before the valuation increases.

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COMPANY BACKERS

Greycroft Partners (Bumble, Segment, Public)Haymaker (Netomi, SpaceX, Flyr, Gusto)Bonfire (Writer, Outreach)NewFund (Aircall, Fuze, Fairmoney)SBI Holdings (Ripple, eToro, Pipe)

PROBLEMToday’s SMB e-commerce owners have the ability to operate asset-light businesses that generate $3-50m in annual revenue across multiple channels. These businesses have access to descriptive analytics through single-source software programs like Quickbooks, AWS Marketplace, or Shopify Analytics. However, they lack access to a solution that integrates financial insights across revenue & expense channels. Similarly, financial institutions are unable to gain visibility into the financial health of e-commerce companies, particularly those with daily revenue streams and/or a high degree of seasonality.

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SOLUTION & PRODUCT

Brightflow AI’s SaaS product instantly generates financial dashboards and forecasts that offer cross-channel visibility to encourage effective cash-flow management. The software acts as an automated Office of the CFO for SMB owners so they can implement efficient operating strategies and promote healthy margins. Brightflow AI’s prescriptive forecasts are utilized by SMB owners and capital providers alike for capital management. The software is currently utilized by financial institutions for the distribution of debt and equity funding, including Brightflow AI’s proprietary direct loan program.

Software: AI-powered SaaS platform that aggregates data from SMB revenue- and expense-based operating systems to offer financial dashboards and forecasts for effective cash flow management and access to capital.APIs supported: banking (Plaid), e-commerce (Shopify, Amazon), accounting (Quickbooks, Net Suite, Xero), and ad spend (Facebook Ads, Google Ads, Amazon Ads).Lending: Brightflow AI Capital Program powered by financial insights from the SaaS platform and backed by $180m in debt warehouse financing in partnership with two capital providers. All loans are asset-backed and underwritten through non-recourse SPVs. Contractual covenants require first lien, DACAs, and continuous integration with the Brightflow AI SaaS platform.

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TRACTION

The Company is growing incredibly fast scaling from $580k in Consolidated Revenues in 2021 → $6.8M in 2022 → $15.5M est. in 2023 with projections to reach $52.8M in 2024. At our entry price of $80mm, we’re investing at an extremely attractive ~1.5x 2024E Consolidated Revenues.

Consolidated Revenue: $15.6m EO23 → Projecting $53M revenue EO24YoY Growth:3xSoftware MRR: $530,000Free Software Users: 452Free User Retention Rate: 72%

Key Partnerships: To date, Brightflow AI has deployed $70m loan funding, in partnership with two major debt warehouse providers, i80 Group and Tacora. The company has secured access to up to $180m to support the continued growth of the Brightflow AI Capital Program. They continued the growth of their SaaS platform revenue in 2023 by inking a $2m servicing contract with Community Investment Management (CIM) that is backed by access to Brightflow AI’s SMB Software Data. CIM is an institutional debt capital manager based in San Francisco.

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BUSINESS MODEL & UNIT ECONOMICS

Brightflow AI generates recurring revenue in two ways: a) through recurring SaaS contracts with e-commerce SMB owners and financial institutions b) via origination and interest from Brightflow AI’s proprietary direct loan program, funded in partnership with debt warehouse providers.The company has utilized lending as a low-cost customer acquisition strategy to build a finance-first SaaS platform. Brightflow AI has conducted over $70m in lending to date and has access to up to $180m in additional debt funding. All lending activity is conducted through non-recourse Special Purpose Vehicles.

Brightflow AI offers three paid SaaS product solutions:All SMB loan clients utilize the enterprise software solution ($7,500-10,000, MRR). The product has historically included a 2-year MRR contract supported by loan covenants that require continuous integration.This offering includes custom integrations on an as needed basis. Not all enterprise software clients receive customization and these costs are accounted for in pricing across the board. Financial Institution clients utilize platform insights for loan portfolio servicing. Pricing for Financial Institution access to Brightflow AI SMB Software Data is developed on a client-by-client basis. Currently, they are executing on a $2m contract with Community Investment Management (CIM). Brightflow AI also collects a software servicing fee on the Brightflow AI Capital Program, paid by the debt warehouse facility providers. This fee is calculated based on the outstanding principal balance of the portfolio and ranges from 1-2%.Brightflow AI launched the base software product in late July 2023 ($450 MRR). This product includes unique features beyond the free solution, including SKU forecasting as well as a 13-week cash flow forecast. The base software annual contract currently requires an up-front payment for the first 3-months, shifting to a monthly payment plan thereafter. Initial base software traction has been strong, with 10 clients converting from the free platform offering to their base model since the inception of this sales motion.

Key Metrics

LTV:CAC - The external CAC for the enterprise software solution is zero as Brightflow AI has largely relied on referrals in the past for customer acquisition. Given that the base software product was recently launched, and that the company expects to utilize funding from this equity round to increase the sales and marketing spend on this side of the business, the forecast assumes a 3x LTV:CAC ratio for this product, in keeping with industry standards.

ACVSMB Enterprise SoftwareProduct Launch: Q1 2021Current Pricing: $7,500-10,000, monthly

ACV: $120,000

Financial Institution SoftwareProduct Launch: Q1 2022Current Pricing: 1-2% Outstanding Principal Balance (OPB)ACV: Tied to OPB, current capacity to scale to $180m in OPB

SMB Base SoftwareProduct Launch: Q3 2023Current Pricing: $300-600, monthlyExpected ACV: $5,400

Customer Profile: Omnichannel e-commerce businesses generating $2-$50M in ARR and financial Institutions investing in SMB customers with a similar profile to Brightflow AI’s software-user ICP.●   Current SMB clients are mainly owner-operator CEOs who also act as de facto CFOs and/or who work with consultants to aggregate accounting data.●   Current financial institution clients are debt facility warehouse investors who derive insights from the SaaS product to facilitate loan origination, augment portfolio monitoring, and activate servicing.

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MARKET OVERVIEW

Software: As digitization and platform-based e-commerce has taken off, SMBs lack the tools that enterprise companies have to accurately manage and forecast their financial data. With the growth and development of AI, SMBs need financial tools that can digitize the Office of the CFO, eliminate manual work, and reduce the margin for human error (PYMNTS).Lending: SMBs globally have unmet capital needs of ~$5.2T annually (McKinsey). With the further consolidation of the banking system, and specifically, recent closures of regional banks, this chasm will continue to grow for SMB credit consumers. Financial Institutions need software solutions that provide visibility into the financial well-being of their clients for effective and efficient portfolio monitoring.

Ecommerce sales remain robust despite economic uncertainty. Q3 2023 e-commerce sales estimates increased 7.5% from Q3 2022 (US Census) and ecommerce is projected to account for 95% of purchases by 2040 (Forbes). 75% of consumers are making purchases both online and in brick-and-mortar stores, showing a growing need for businesses to merge & track omnichannel purchases and fulfillment (McKinsey).

There have been strong exits in the space, including Thoma Bravo’s acquisition of Anaplan for $10.7B in 2022 and Workday’s acquisition of Adaptive Insights for $1.5B in 2018. Brightflow AI could be a nearer term acquisition target for other fintech companies, banks/lenders, or incumbent banks looking to expand their footprint in the SMB space.

Brightflow AI has abated some of its internal risk related to the market-wide rising cost of capital. As macroeconomic trends push interest rates higher, Brightflow AI has negotiated a lower cost of capital with the i80 Group, the current majority facility provider (reduction of 250bps as of Sept 2023) - this will improve margins on the lending side of the business in both short- and long-term and allow for sustainable deployment of remaining available funds ($110m/$180m currently available to lend)

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COMPETITIVE LANDSCAPE

SMB-Focused Lenders: these lenders are focused on SMBs; however they do not have an industry focus nor do they offer financial dashboards/insights. Brightflow AI’s GTM & ecommerce focus is differentiated.Lending Tree: online lending portal with specific products for SMBs. Current market cap of $410M.Bluevine: business banking & lending platform focused on SMBs. Raised $102M in Nov 2019.Uplyft Capital: online platform for business loans.

Financial Data APIs for SMBs: these companies provide access to SMB financial information to 3rd parties (e.g. loan servicers). Brightflow AI, while providing access to SMB financial information, also provides an actionable financial analyses for businesses and 3rd parties alike to improve business decisions.Codat: API to connect with SMB financial data. Raised $100M Series C in June 2022.Rutter: universal commerce API (“Plaid for commerce”). Raised $27M Series A in March 2022.Enigma: Data-as-a-service company providing data on SMB financials. Raised $95M in Sept 2018.

Boutique Financial Advisors (First Republic Bank, Webster Bank, Lazard): banks and other traditional financial institutions provide financial advisory services; however services are are significantly more expensive than Brightflow AI and require additional setup time

Incumbents with Financial Planning (Workday, Oracle, Anaplan): these ERPs are expansive in product and do not offer the customization and specific features Brightflow AI is able to provide to ecommerce sellers

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LARGE RECENT FUNDRAISES IN THE SPACE

E-commerce loan startup Wayflyer secures $1B deal from Neuberger BermanAmpla raises $40M Series A for its business of providing credit to commerce brandsSettle bags $60M to simplify bill payments for e-commercehttps://techcrunch.com/2022/04/19/brex-just-paid-90m-for-pry-financials-a-10-person-financial-planning-software-startup-and-heres-why/

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TEAM

The 40-person team includes 9x founders with talent hailing from FAAMG Tech Giants, the Consulting Industry’s Big 5, and some of the best financial institutions in the world.

Robbie Bhathal (CEO, co-founder): repeat founder with over a decade of startup experience and deep sector expertise in fintech & financial innovationJeffrey Priebe (CTO/CPO, co-founder): 15+ years of product & engineering experience across Fortune 500 companies and within AI/big data

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PRESS

‍https://www.prnewswire.com/news-releases/brightflow-ai-raises-15-million-series-a-100-million-in-debt-financing-to-bridge-financial-gap-for-small-business-owners-301629271.htmlBrightflow AI Acquires CircleUp to Deepen Customer Insights and Help Small Businesses GrowBrightflow AI aims to spotlight small business cash flow

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PAST INVESTMENT ROUNDS

Series A: Feb 2022, $14M, SBI, Haymaker (Lead), New Fund, Lynette Capital, House Fund, Greycroft, Skydeck, Bonfire VenturesSeed: Sept 2021, $4M, Bonfire Ventures (lead), New Fund, House Fund, Sky Deck, Precursor Ventures, Greycroft