The Story: A Founder Stares Down the VC Playbook, and Walks the Other Way
By the time Simon Turner reached a crossroads in early 2021, he had already lived through the venture capital playbook once. He had co-founded Myagi (a retail sales enablement SaaS platform connecting brands, retailers, and distributors) after selling his first company in the retail sector in 2014. He had watched colleagues chase VC term sheets, dilute their cap tables round after round, and discover at exit that the waterfall left them with far less than the headline number suggested.
Turner, a seasoned entrepreneur from Melbourne, Australia, now residing in Tulsa, Oklahoma, co-founded Myagi after selling his first company in the retail sector in 2014. He had built the company around a distinctive land-and-expand customer model: referral-driven, margin-conscious, and growing at its own deliberate cadence. By early 2021, that cadence had produced $2.4 million in annual recurring revenue. The business worked. What it needed was fuel, not a structural overhaul.
Venture capital would have provided the fuel, but it also would have installed a new clock. Turner had run the full gamut of growth capital options across his entrepreneurial career. He understood the venture capital playbook intimately, and he had grown skeptical of it. “Venture capitalists will challenge you to grow at all costs,” he reflected. “One thing venture capital doesn’t take into account is that many businesses have a natural cadence at which they grow.”
So Turner made a different call. In early 2021, Turner turned to TIMIA Capital for a strategic infusion of non-dilutive capital to fuel Myagi’s growth without diluting equity. That single decision, debt over venture equity, would define how the acquisition proceeds were ultimately distributed two years later.
The Decision: $2.5M Non-Dilutive Debt Facility vs. a Venture Round
Turner’s capital need was concrete: Myagi’s land-and-expand model required investment in sales capacity, marketing reach, and customer success infrastructure. The question was not whether to invest; it was how to finance that investment, and at what cost to ownership.
Option A was the conventional path: raise a venture equity round. In 2021, with SaaS multiples still elevated, a $2.5 million raise would likely have valued Myagi in the $8–12 million range on the low end: representing a 20–25% dilution to the cap table at entry, before any future-round dilution, liquidation preferences, or anti-dilution provisions were layered in. That dilution would be permanent.
Option B was a non-dilutive revenue-based debt facility. TIMIA Capital provided a $2.5 million investment facility, which Turner deployed into Myagi’s referral-based sales model and software capabilities. The structure did not alter the cap table. It did not introduce a new board seat or a new set of growth-rate mandates. It created a fixed obligation, repaid from revenue, but left the ownership structure exactly as it was.
Turner chose Option B. The logic was straightforward: many founders want liquidity and growth capital but are unwilling to cede control unless they are cashing out entirely, and a leverage-based structure allows them to receive capital through borrowing without ceding that control.
The broader market context validated the instinct. In 2024, venture debt deal activity hit $58.7 billion, a 119% increase from 2023, reflecting rising founder demand for growth capital without ownership dilution, positioning debt as a strong alternative. Turner was ahead of a structural shift that is now reshaping how growth-stage operators think about capital.
Critically, the debt facility was sized to match the business, not to maximize a fundraising headline. Lower middle market leveraged recapitalizations and debt facilities for growth-stage companies typically close at 3x to 5x EBITDA in total debt, with pricing tied to prevailing senior secured rates plus a margin based on risk profile. Staying inside that range preserves the financial flexibility that makes the strategy work in the first place.
The Outcome: 83% ARR Growth, a Clean Acquisition, and a Cap Table Left Intact
The results were not ambiguous. The funds allowed the team to expand sales and marketing efforts and enhance customer success initiatives, key components of Myagi’s land-and-expand model. As a result, Myagi’s annual recurring revenue soared from $2.4 million to $4.4 million, solidifying its market leadership and setting the stage for a successful exit by acquisition.
This strategic investment culminated in a successful exit when Myagi was acquired by Rallyware just 17 months after securing the non-dilutive debt facility. Rallyware, a performance enablement platform for large-scale sales forces, absorbed Myagi’s platform in an outcome that rewarded the founding team and preserved the company culture they had spent years building.
Now consider the counterfactual. Had Turner raised a $2.5 million venture round in 2021, he might have surrendered 20–25% of the company to do it. At acquisition, that dilution would have translated directly into dollars leaving his pocket and entering a VC fund’s. Instead, the debt was cleared at close, and the equity proceeds flowed to the people who had built the business.
The Myagi story was not isolated. A parallel case played out in the public safety technology sector. The founders of SafePointe (Greg and Timothy Holifield) engaged TIMIA Capital in September 2022 for a $1 million USD debt facility. The growth capital helped them reach a significant milestone just 12 months later when SafePointe was acquired by SoundThinking, Inc., a leading public safety technology firm listed on Nasdaq. The acquisition marked the Holifields’ fourth successful exit since their entrepreneurial journey began in 2010, showcasing their strategic use of non-dilutive capital to accelerate business growth and maximize founder value.
This strategic decision allowed them to propel SafePointe to triple its monthly recurring revenue by the time of its acquisition. One dollar of debt. Three times the MRR. A clean Nasdaq-listed exit.
The Lessons: What the Myagi Framework Teaches Every Operator Facing a Capital Decision
The Myagi and SafePointe stories sit inside a macro shift that is accelerating across the private capital markets. Leveraged loan issuance tied to sponsored dividend recaps grew 11% year-over-year to $74.3 billion in 2025 after rising 326% year-over-year in 2024, according to PitchBook’s April 2026 Leveraged Loan Volume Report, reflecting continued lender appetite and sponsor urgency to return capital amid extended holding periods. Private equity sponsors learned long ago what Turner applied at the operator level: debt creates liquidity and preserves upside. In the year to September 30, 2025, private equity sponsors pulled $34.7 billion out of the companies they own through dividends financed by the leveraged loan market, according to Stout Advisors, a figure that already exceeded the full 2024 total and closed in on the 2021 peak of $35.1 billion. None of these sponsors sold anything. They still owned the companies. They just got paid.
But the lever works differently (and better) when it sits in a founder’s hands rather than a sponsor’s. When a PE firm loads leverage onto a portfolio company to fund a dividend, the debt obligation remains on the operating company’s books regardless of which direction the business turns. Dividend recaps increase the operating company’s leverage and reduce its financial flexibility, a dynamic that introduces potential tension between near-term liquidity and long-term exit optionality. A founder using non-dilutive growth debt avoids that tension entirely, because the proceeds are reinvested into the business itself, compounding the equity rather than extracting it.
The discipline that separates the Myagi story from cautionary tales is sizing. While non-dilutive and leveraged structures offer real advantages, increased leverage reduces financial flexibility and increases risk, and if the company underperforms, debt service becomes burdensome, potentially limiting reinvestment or the ability to weather downturns. Turner’s $2.5 million was calibrated to what the business could service on its existing revenue base, not to what lenders might technically approve. That discipline is the entire game.
For operators evaluating a similar decision, the framework simplifies to four questions: Does the business generate predictable, recurring revenue sufficient to service the debt? Is the capital being deployed into activities with a direct, measurable return? Would an equity alternative permanently dilute a cap table that is still building toward its highest-value exit? And is the founder prepared to treat debt obligations as senior, not optional, claims on cash flow? If all four answers are yes, the non-dilutive path deserves serious weight.
Debt, used correctly, lets founders grow at the pace the business actually sustains. That rhythm protects margin, culture, and ultimately the exit multiple.
Key Insights
- Debt preserves the cap table permanently, not just today. Every point of equity not surrendered during the growth phase is a point that rides the full exit multiple, compounding over time in a way that a VC’s liquidation preference actively works against.
- Non-dilutive growth capital is no longer a niche instrument. For founders who want to scale without handing over additional equity, venture debt has become a serious option, not a backup plan. In 2024 alone, US venture debt deals hit a record $53.3 billion, signaling a clear shift in how startups think about growth capital.
- The VC clock is a real structural risk, not just a cultural complaint. Turner’s post-exit reflection was pointed: venture capital doesn’t account for the natural cadence at which many businesses grow, and for many companies, growing too fast can be detrimental as founders try to force growth in a market that can’t sustain it.
- Sizing is the discipline that separates strategy from distress. Bank lending standards for leveraged transactions tighten materially during periods of economic uncertainty, which directly affects both available proceeds and pricing, a reminder that the right facility is the one the business can service through a downturn, not the largest one the market will approve in a peak environment.
- The leveraged recap market validates the principle at scale. What Turner did at the growth-stage operator level, institutional PE sponsors execute routinely at the portfolio level, using borrowed capital to extract value without surrendering ownership. Dividend recaps are one of the few tools available to boost distributions without forcing asset sales, particularly when sponsors believe further value creation opportunities remain. Founders should apply the same logic with the same discipline.
