The Situation
A rapidly expanding provider of cloud hosting and managed services (the “Company”) was looking to finance new IT hardware for us in its data centers around the globe. The Company specializes in “bare-metal” infrastructure hosting, in which servers and other equipment are dedicated to a single user. This is different from the industry standard of multi-tenant platforms that offer more generic solutions. The bare-metal configuration allows for customization, providing clients the capability to add scale and specialization in minutes.
The Company was looking for a lease line for up to $10 million to finance the new equipment purchases. While the Company had raised significant equity from institutional investors to support operations, it logically sought to raise non-dilutive lease capital for equipment. Atalaya originated and closed the transaction directly with the Company.
The Solution
In Q3 2019, Atalaya closed on a lease line for the Company to finance equipment to accommodate its anticipated growth. Atalaya’s lease line can be drawn down via several fundings over the next 6-12 months, depending on the pace of growth.
Atalaya had conviction in the business model and management team, which included founders who had built other successful tech businesses prior to founding the Company. The Company had gained early traction with a differentiated product strategy, is growing rapidly, and is backed by a group of sophisticated, experienced IT investors. Our view of the business, along with prior experience in the sector, allowed Atalaya to be flexible in providing lease financing to purchase equipment from various vendors and with numerous end locations.
The Result
With the lease facility, the Company will be able to expand quickly to meet its rapidly growing customer base, including new enterprise clients. The financing allowed the Company to preserve cash and equity value. The flexibility of the lease line provides a better solution than managing separate vendor finance programs.
Supporting Growth
With Atalaya’s financing, the Company is able to continue providing a high level of service to existing clients and accelerate its absorption of a near-term pipeline, all the while minimizing equity dilution, preserving liquidity and maximizing flexibility.
