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viewTimia Capital Corp.

TIMIA Capital confident its fintech platform can navigate crisis as its financials bound ahead

Snapshot

The firm's business model is to make money via a combination of monthly payments and periodic gains on its investments

Timia Capital Corp. -

Quick facts: Timia Capital Corp.

Price: 0.22 CAD

TSX-V:TCA
Market: TSX-V
Market Cap: $9.95 m
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  • Swings to net income in latest quarter
  • Management believes recurring revenue software companies offer security and stability
  • Strong financial position

What TIMIA Capital does:

TIMIA Capital Corp (CVE:TCA) is a specialty finance company, which provides growth capital to technology companies in exchange for payments based on monthly revenue.

Its financing allows SaaS (software-as-a-service) and knowledge-based start-ups to “pay as they grow”. The business model is to make money via a combination of monthly payments and periodic gains on its investments.

The companies that TIMIA supports get financing upfront, but it acts like debt because there is no dilution.

It is also worth mentioning that, in TIMIA's target market, there are significantly more companies looking for capital than there are financing options available.

TIMIA's focus is on entrepreneurial management teams who have $1 million to $10 million in annual recurring revenue and are aiming to grow.

Its internal rate of return (IRR) target is greater than 20%, calculated over the lifetime of a deal, which is typically five to seven years. Each deal it does is secured debt, but with a variable repayment stream, tied to revenue.

This form of alternative financing complements both debt and equity financing, while allowing entrepreneurs and existing stakeholders to retain ownership and control of their businesses.

How is it doing:

It has been a busy start to 2020 for TIMIA and during the current coronavirus pandemic, the group has said that its first priority is ensuring that its existing portfolio will have sufficient capital to weather the turmoil.

On March 18, the group confirmed that it had 19 current loan investments outstanding totalling more than US$22 million which are providing payments in excess of US$250,000 a month.

The same day it also revealed it had struck a US$2 million investment facility with Measured Inc, a measuring focused tech group for the media industry. That deal includes an initial disbursement of US$750,000, which has been advanced to Measured, and a further US$1.25 million to be disbursed upon certain milestones being met.

On April 23, the group posted results for the three months to February 29, 2020, which showed it had swung to a net income compared to a loss in the same period a year earlier.

Net income for the quarter came in at C$444,144 compared with a net loss of $255,480 in the first quarter last year, mainly due to continued portfolio growth and C$516,009 recognized as gains on investments two successful exits of TIMIA's loan portfolio.

The group also saw a record quarter for revenue at C$1,024,188, up 80% compared to the same period last year. Interest income came in at C$939,701 compared to $510,330 a year earlier, an increase of 84%, while its total assets increased by 105% to C$30 million.

TIMIA's loans receivable book increased by 71% in the first quarter to around C$21.6 million versus the same period last year. During the quarter, the firm said, it had completed three investments, distributing capital of US$1.5 million to an American company and $900,000 follow-on investments to two Canadian companies.

Referring to the coronavirus pandemic, the group pointed out that none of its investments were in arrears, but it conceded that it may be several months before the full effect of the economic slowdown is felt in its portfolio.

Inflection points:

  • Further deals
  • Economic activity movements

What the boss says:

In the first quarter results statement, Mike Walkinshaw, CEO of TIMIA Capital said: "During this period of uncertainty, we are confident in our abilities and our fintech platform to navigate ahead successfully.  We have the right capital structure in place and will continue to be vigilant with new and previous investments in select SaaS companies."

In November last year Walkinshaw had told Proactive: "We offer a unique product into a very specific market and there aren't a lot of people doing that."

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