When Gary Nakamura joined SocialChorus as the company’s CEO in 2017, it was because he saw an opportunity to build a great business. He knew that one of the biggest challenges large corporations face is communicating effectively with their employees, and was impressed with the workforce communications platform the company had built to solve the problem. The innovative platform offers enterprises a single place to plan, create, publish, and measure employee communications.
Today, the San Francisco-based company helps some of the biggest, best-known enterprises in the world, including Boeing, Ford, Vodafone, Whirlpool, and Hilton. Using state-of-the-art machine learning and artificial intelligence, SocialChorus improves workforce engagement and communication to align teams around company goals so that they can work as one.
The need for creative capital
According to Gary, over its 10-year history, SocialChorus had used a combination of venture capital, private equity, and venture debt to help fuel its growth. By 2019, the company’s revenue was growing quickly and approaching break-even, and Gary was eager to find creative alternatives to fund the continued momentum in the business.
“It’s been a great year,” says Gary. “We’ve seen 50 percent ARR growth and are well on our way to becoming a profitable business. Taking venture debt was the logical choice because we wanted to lock in some additional runway. Given how capital-intensive targeting and selling to our customer base is, we knew that the right credit facility would allow us to continue to grow our revenue and complete another renewal cycle with our customer base prior to a potential bigger equity raise next year.”
Although SocialChorus has taken venture debt in the past, Gary was open to partnering with other lenders. “When we got introduced to Espresso Capital and got a sense for how the team works, we immediately saw an opportunity,” Gary says. “Espresso not only had more competitive terms than any of the lenders we’d worked with previously, they were able to structure the facility with terms that reflected the specific needs and financial profile of our business. That flexibility was critical for us.”
Using venture debt to enable ambitious growth targets
As part of its credit facility with Espresso, Gary was able to refinance SocialChorus’s existing debt while adding more cash to its balance sheet. Gary plans to put the capital to good use, investing in the company’s sales and marketing efforts so that it can continue to grow its revenue base by 50 percent or more, while cementing its position as category leader.
Looking ahead, Gary sees a bright future for SocialChorus. “We see an opportunity among large global enterprises that are trying to revamp their workplace and improve the employee experience,” he says. “Companies are becoming increasingly focused on better communication and alignment with their workforce. Our solution enables enterprises to align with their workforce by helping them communicate more effectively and efficiently. Not only that, it’s backed up with data and metrics so that they can see if they’re being effective and whether their workforce is actually engaged.”
While it’s still early days in the company’s relationship with Espresso, Gary says the experience so far has exceeded expectations. That includes the due diligence process which he describes as thorough but uneventful. “It’s been a very good partnership for us,” says Gary. “In business, it’s always all about who you work with, and Espresso has put together one of the best teams we’ve seen.”
“Espresso not only had more competitive terms than any of the lenders we’d worked with previously, they were able to structure the facility with terms that reflected the specific needs and financial profile of our business. That flexibility was critical for us.”
Gary Nakamura, CEO, SocialChorus