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...

Brian Seidensticker and Kiah Hochstetler discuss how they built Mount North Capital, a Last Best Partners portfolio company, into a data-driven, technology-enabled real estate investing platform that enables passive real estate investors to access the tax sale investment marketplace.

The firm has strategically positioned itself to capture opportunities during economic slowdowns or downturns, as the tax sale investment market often presents increased opportunities during such periods.

• Mount North Capital aims to offer asset-backed investment opportunities in the distressed property space to passive investors, all supported by data, technology, and a team of experienced real estate professionals.

• Sister company Tax Sale Resources provides users with centralized access to tax sale data, designed to help these real estate investors save time and money while navigating this complex landscape.

• Many of these users are real estate investors, and one of their most significant challenges in pursuing more deals is access to capital.

• Seidensticker and Hochstetler explain Mount North Capital's capital partnership program and how their two-sided solution, which aids both real estate operators and passive real estate investors seeking asset-backed investment opportunities, came together in forming Mount North Capital.

The podcast episode serves as an in-depth exploration of the multifamily investment landscape in Phoenix, featuring insights from Ben Leybovich, co-founder of WhiteHaven. The discussion commences with a contextual overview of Phoenix as a compelling MSA for multifamily investments, emphasizing the city's exponential population growth and the resultant demand for housing. Leybovich details how demographic trends and economic policies converge to create a fertile ground for multifamily real estate investment. He emphasizes the importance of understanding the macroeconomic backdrop that influences real estate dynamics, elucidating factors such as job growth, migration patterns, and construction costs that collectively shape investment opportunities.

As the conversation progresses, the episode delves into WhiteHaven's strategic positioning within this vibrant market. Leybovich shares the firm's approach to identifying undervalued assets and leveraging construction expertise to enhance property value through strategic renovations. He highlights the critical role of thorough due diligence in navigating the complexities of the multifamily sector, especially in a market where competition for quality assets is intensifying. By showcasing real-time examples of WhiteHaven’s investment strategies, Leybovich provides listeners with practical insights into the operational challenges and triumphs inherent in multifamily investments. The episode culminates in a forward-looking perspective, encouraging listeners to consider the long-term potential of investing in Phoenix's multifamily market, backed by WhiteHaven's expertise and local market knowledge.

Takeaways:

• The multifamily investment landscape in Phoenix is particularly appealing due to the confluence of robust population growth and insufficient housing supply, creating a favorable environment for rental price appreciation.
• Ben Leybovich emphasizes that the unique macroeconomic factors in Phoenix, including a stable regulatory framework, contribute significantly to its attractiveness as a multifamily investment destination.
• Whitehaven's investment strategy involves identifying opportunities in both new construction and value-add multifamily properties, particularly focusing on acquiring assets below replacement cost.
• The current economic climate presents a strategic opportunity for savvy investors, as institutional capital remains on the sidelines, allowing smaller firms like Whitehaven to capitalize on discounted properties.
• With the anticipated population growth in Phoenix, projected to rise by approximately 1.2 million by 2030, demand for multifamily housing is expected to surge, emphasizing the necessity for new developments.
• Ben's insights reveal that the construction industry is currently experiencing significant challenges, including escalating costs and labor shortages, which may limit future supply and further enhance rental growth potential.

Links referenced in this episode:

• www.atlalts.com
• www.Whitehaven.com
• www.gpwealthadvisors.com

Companies mentioned in this episode:

• Whitehaven
• ATLalts
• Gramercy Park Wealth Advisors, LLC