Camber Road is a venture leasing firm that provides non-dilutive capital for the acquisition of hardware and equipment. I spoke to Sam Posl, Territory Manager, about how their leasing model can help growing companies scale while reducing dilution.
What does Camber Road do?
SL: We work with high-growth companies to help them acquire the equipment and hardware they need to run and grow their business, such as lab and manufacturing equipment, office furniture, AV equipment, IoT devices, robotics, you name it. If it’s on the capex list, it’s usually something we can provide capital for.
Companies like working with us because we’re an additional source of non-dilutive capital for them that is much less expensive than their equity dollars, especially right now when capital is much harder to get than it was 12, 18, 24 months ago for startups. We want to be an “all weather” partner for our customers.
How does your model work?
SL: Our customers choose the equipment they want to use, select the vendor, negotiate payment terms and price, then we pay for the equipment on their behalf. We own the equipment, and they rent it from us – because it’s a rental and not a loan, there’s no equity or warrants of any kind. There are also no restrictive covenants, liens on the business, or personal guarantees.
Our structure complements equity, senior secured debt, and any other loans that they have. It’s a simple, straightforward contract, and our capital can be really meaningful to growing companies.
What are the differences between Camber Road and Kineo’s model?
SL: In my experience, Kineo is exclusively looking to fund revenue-generating hardware and delivered “as a Service”.
For example, the hardware we fund can be sold “as a Service” – many customers do RaaS or IoTaaS.
We also fund equipment that is used by our customers – Some examples of this would be a company building out a lab, setting up an office, or building a pilot or pre-pilot line to prove their novel technology.
When do companies come to Camber Road – at what stage in their business? Is it once they’ve started to generate revenue?
SL: Not necessarily. As a lender, we really like revenue, but a company being pre-revenue isn’t necessarily a dealbreaker for us as we look at each company holistically.
We typically engage with companies once they have raised institutional capital and need to start acquiring hardware or equipment.
What’s the diligence process for applying for financing with Camber Road?
SL: Our diligence process is not cumbersome and usually takes less than a week once we have received a standard diligence package. We also like to meet with companies in-person and see their facilities as part of the process – relationships are really important to us, and meeting in person helps build that trust.
What do you need to see from startups to be considered for financing from Camber Road?
SL: Most of the companies we work with have institutional investors on the cap table. But, at the end of the day, we can be a valuable partner to any company that is growing quickly and acquiring hardware or equipment.
How do you structure your contracts?
SL: We don’t charge underwriting fees, commitment fees, doc fees, legal fees, etc.
The contract is a true lease – we own the equipment and our customers rent it from us. At the end of the initial term they can continue renting the equipment, buy it from us, or return it to us.
Why wouldn’t a startup want to look at venture releasing?
SL: Our financing is asset specific – if there’s no equipment or hardware being acquired, there’s nothing for us to fund on a company’s behalf.
Additional Resources
– Camber Road and equipment finance live
