San Antonio-based Element Finance has closed a $30 million fundraise for its second opportunity fund, the company's CEO John Gallagher told the Business Journal.
Formerly Element SaaS Finance, the company provides an alternative form of debt financing for startups, the majority of which are cloud-based business software providers. Element was spun out as a new company from San Antonio-based Scaleworks Associates in December 2019, after being part of Scaleworks' finance division.
Forty-six investors contributed to the raise, according to a document filed with the U.S. Securities and Exchange Commission on Sept. 29. The company had raised roughly half of the fund by mid-February of this year, as previously reported by the Business Journal.
While many of those investors were local and had previously invested in Element, the company expanded its investor base across Texas, Gallagher said.
The second fund is enabling the company to increase the size of its loans. Previously, Element issued loans between $200,000 to $3 million, but now loans are in the $5 to $6 million range, with $10 million being the largest loan the company has issued, Gallagher said.
Element is also using the funds to expand its customer base and grow its business in San Antonio, Gallagher said, adding that the company has four full-time employees.
The company did see a bit of a lull in business at the onset of the pandemic.
"Whenever Covid kicked off, everyone was very cautious in taking more money if they weren't on the [venture capital fundraising] track," Gallagher said, adding that companies also took in federal emergency funds such as the Small Business Administration's Paycheck Protection Program and Economic Injury Disaster loans for about two months.
Now Element is back to loaning out at pre-pandemic levels, and has given out loans to a total of 35 startups, double the amount it had given out since after it closed its first opportunity fund worth $3.5 million in August 2020, Gallagher said.
