John Philip Green is an unorthodox entrepreneur.
Dressed in bespoke suits, bowties, and the occasional suspenders, Green’s wide eyes, loopy smile, and thatch of unkempt hair affect an air of the boy wonder CEO – a Tom Hanks character remade for modern times. Except that Green won’t let you call him CEO, preferring instead the title of Chief Executive Dad.
The unorthodoxy extends to his company, CareGuide. The company has made waves in the past year for it’s unique approach to fundraising, drawing cash from a cabal of over 70 institutional and investors (including notable names like Hootsuite’s Ryan Holmes and Vidyard’s Michael Litt). The company also famously avoided providing customer support during the first year of its existence, something almost unheard of for an online service marketplace. Green’s mother has taken on part of that support role for CareGuide’s Sitter.com site, operating under the title of Chief Operating Grandma.
Today, CareGuide announced that it has raised $1 million in capital, as well as additional financial services, from RBC, the largest bank in Canada. The debt financing brings CareGuide’s total funding to $6 million in the last year, after previous closes in March and July last year.
The financing is most notable because of its uncommon structure: the “term debt facility,” as RBC calls it, is a warrantless loan, meaning that CareGuide was able to raise the financing without any dilution. Simply put, the startup with the cutting-edge list of angel investors just flipped the script and grabbed funding from one of Canada’s oldest financial institutions. It’s a funding path available to few entrepreneurs, and one that has prompted calls from Green’s peers.
Simply put, the startup with the cutting-edge list of angel investors just flipped the script and grabbed funding from one of Canada’s oldest financial institutions.
“Many of my entrepreneur friends were very curious about this deal,” Green said, noting that RBC’s term sheet was one of three offered to CareGuide, but the only from a Canadian bank. “I told them that if you have the cash flow, debt really should be part of your financing mix, especially if you can get a warrant-free term sheet as we did. The word has spread around the community, and several founders have reached out to learn how they can fund their business without dilution.”
It’s generally unheard of for a Canadian startup to get such interest from the Canadian banking establishment, let alone these types of terms. Speaking with Jonathan Gabay and his colleagues in RBC’s Knowledge Based Industries (KBI) group, he was very clear that in this case, the decision was an easy one.
“Extending credit to CareGuide was a straightforward exercise for our team because the company has strong financial performance and the backing by a large and noteworthy group of equity investors,” Gabay said. Gabay indicated that, for deals of this type, a startup’s investor group is a key driver in the evaluation process.
Of course, the question remains as to what CareGuide intends to do with the money. Regardless of CareGuide’s strong cash flow and deep investor bench, it’s hard to imagine RBC giving the company such generous terms without a second shoe dropping. Green remained mum about specifics, but has been clear in the past that the company is pursuing something big. “Our appetites have been growing with our access to capital, and we’re now planning to do much bigger things, such as acquisitions,” Green told us in March.
Whatever the final outcome, one thing is clear: it will be pursued in CareGuide’s typically unorthodox fashion.