Icertis Raises $150M In Debt Financing With Venture Market Cooling

It’s no secret the 2022 venture capital market is not what it was last year.

Investors have pulled back significantly and valuations have dropped. That dynamic has made many startups look at alternative forms of financing that aren’t reliant on pure venture capital.

Bellevue, Washington-based contract management software Icertis locked up $150 million in financing — an even split of a revolving credit facility and convertible financing from Silicon Valley Bank.

“This new funding from Silicon Valley Bank is a major vote of confidence in our growth trajectory, enhancing our already strong capital position, and enabling us to lean in to capture market share and build towards the next exciting chapter in our company’s journey,” said CFO Rajat Bahri in a release.

Icertis’ contract platform helps companies structure their commercial, legal and operational data within contracts, and connect that data to its other internal systems such as human resources and CRM platforms.

Debt

Convertible notes are seemingly getting more popular with startups as venture capital pullback continues (something we mentioned months ago). The debt works like a short-term loan, but convertible notes are repaid to the investor at a later point in equity — i.e. after an IPO — typically at a discount, and can also include an interest rate. Convertible notes also can benefit the company in the sense of providing upfront cash without having any initial dilution.

In early October, Eden Prairie, Minnesota-based cybersecurity firm Arctic Wolf raised $401 million in convertible notes led by existing investor Owl Rock.

Convertible debt financings also eliminate the need of setting a valuation in a down market. In March 2021, Icertis announced an $80 million Series F at a valuation of over $2.8 billion. Just earlier this year, it was reported the company was worth $5 billion.

Founded in 2009, Icertis has raised more than $520 million to date.

Illustration: Dom Guzman