Launched in 2019, Coromandel Capital offers flexible, non-dilutive, growth-oriented asset-based lending solutions to businesses in specialty finance, fintech, and technology-enabled sectors that generate predictable, recurring revenue. As one of the few non-bank lenders specializing in small-ticket debt capital solutions, Coromandel Capital and similar entities—willing to provide financings below $20 million—are vital players for capital-intensive specialty lenders. The firm's financings typically range from $5 million to $50 million and have a three-year term.

Co-Founder and Managing Partner Rob McGregor and I engaged in discussions on a variety of topics, including:

- The role of debt financing in empowering startups and other early-stage and growing companies, particularly in relation to venture capital funding.

- The risks associated with double pledging assets, including explanations thereof, especially in light of the recent collapse of First Brands.

- The utilization of debt as a strategic tool for business growth.

- The hidden costs related to venture debt.

- The untapped potential inherent in the specialty finance sector.

- The significance of diligent monitoring within lending relationships.

- Strategies for growing as a private lender while safeguarding and maintaining capital.

- Navigating the crowded and competitive private, non-bank lending industry to establish enduring relationships with borrowers and investors.

Among the characteristics Coromandel seeks in ideal borrower partners are:

- Balance-sheet intensive businesses (those originating or acquiring assets, tangible or intangible) that would otherwise finance these assets through equity.

- Companies that have raised equity from Seed to Series B (or similar stages within their lifecycle), possess adequate capitalization to support operational expenses and maintain sufficient 'runway,' with a portion of this equity potentially serving as a contribution (also known as "haircut capital," "first loss capital," or "overcollateralization") for Coromandel's credit facility.

- Subject matter experts and/or executives who are trailblazers with deep industry roots, a robust track record, and a validated business model.

- Companies operating within sizable markets and differentiating themselves through cost-effective customer acquisition strategies, as well as firms that have identified an untapped or "greenfield" opportunity to address underserved or unserved markets.

Key Takeaways for RIAs:

• RIAs have primarily used direct lending to gain private credit exposure, and this conversation delves into the opportunity offered by asset-based lending as a diversifying and complementary strategy for client portfolios.
• RIAs seeking to diversify in growing areas of private credit, such as asset-backed and asset-based strategies, can benefit from understanding how the fund manager underwrites, structures, and monitors their underlying credit exposures.
• Asset-based lending as a non-dilutive financing solution for growing specialty finance, tech-enabled lending businesses, and other growing firms in sectors generating predictable, recurring revenues, is an essential tool for strategic growth.
• Diligent monitoring and assessment of asset-backed loans are crucial in mitigating risks associated with double pledging, as evidenced by the recent First Brands collapse.
• The specialty finance sector harbors untapped potential that will only grow as more lending migrates away from banks, requiring RIAs to develop an in-depth understanding of risk management and strategic growth methodologies being employed by these alternative fund managers providing debt financing.
• Maintaining a competitive edge in the private lending landscape, even in emerging and exciting areas such as asset-based lending and asset-backed finance, requires building enduring relationships with borrowers while preserving capital for fund LPs.
• Venture debt, while a viable option for some startups, carries hidden costs that must be critically evaluated in the context of overall business strategy and capital structure.
• A thorough understanding of the unique dynamics of asset-based finance and asset-based lending strategies is essential for lenders, borrowers, and fund allocators as they navigate the complexities of this evolving market, where alternative investment and non-bank lending industry experts predict significant growth in the years ahead.

Podcast Disclaimer

This podcast is produced and hosted by Andres Sandate, and is the property of Endurance Strategies, LLC.

Andres Sandate is a Financial Advisor with Gramercy Park Wealth Advisors, LLC, and a Registered Representative of GPWA, LLC, a member of FINRA/SIPC.

Gramercy Park Wealth Advisors, LLC and GPWA, LLC are not responsible for the content of this podcast and do not offer investment, legal, or tax advice, nor do they recommend or endorse any securities, products, or strategies discussed.

No part of this podcast may be published, reproduced, transmitted, or rebroadcast in any media or any form without the express written permission of Endurance Strategies, LLC.

This podcast does not constitute an offer to sell or a solicitation of an offer to buy any fund interests, securities, or other financial instruments, nor does it constitute a solicitation on behalf of Endurance Strategies, LLC, its affiliates, or any third-party investment managers, their affiliates, products, or strategies. Any such offer or solicitation may only be made pursuant to the delivery of formal offering documents.

Endurance Strategies, LLC has no obligation to update or revise any information contained herein. The company makes no representations or warranties as to the accuracy or completeness of the information, and this podcast should not be relied upon as the basis for investment decisions or for any other purpose.

This material may be protected by copyright. © Endurance Strategies, LLC. All rights reserved.