Secured $5 MN Financing

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SMTP, Inc. announced recently that it has secured a $5 million financing round. The round was led by the Company’s two largest institutional investors, Special Situations Fund and Bard Associates. The original owners of SharpSpring (which we acquired in 2014) also participated in the round by exchanging $3 million in future cash payments for the Company’s stock.

Highlights of the financing transaction are as follows:

  • Special Situations Fund and clients of Bard Associates collectively purchased $2 million of SMTP stock at a price of $5.50 per share, representing a 5%, discount to market at the time of negotiation
  • SharpSpring’s co-founders and early investors agreed to convert $3 million of future cash earn-out liability into equity at the same price.
  • The $2 million in cash received from outside investors will be provided to SharpSpring’s former owners, reducing the Company’s earn-out liability by a total of $5 million.

“This transaction is beneficial on a number of fronts,” stated Jon Strimling, CEO of SMTP, Inc. “SharpSpring is on a clear trajectory to exceed its growth targets. The placement of stock with key insiders further aligns our interests with those of shareholders and demonstrates our management team’s confidence in the future of the Company. In addition, this financing significantly strengthens our balance sheet.”

The Company had previously announced that SharpSpring is on pace to exceed its earn-out target of accumulating over $5 million in annual recurring revenue under contract by the end of 2015. Net of the payments in stock and cash being made currently, the parties have agreed that the remaining earn-out obligations of $1 million in cash and $4 million in stock will be provided to the original owners of SharpSpring at the end of Q1 2016.

“We’re experiencing strong growth, and we expect growth to accelerate in the future with the power of the combined entity,” commented Rick Carlson, SharpSpring’s President and its largest shareholder prior to the acquisition. “Speaking for myself, our CTO, Travis Whitton, and several key team members, we are excited for the opportunity to own a larger stake in the integrated company as we move forward.”

To facilitate the sale of shares to its two largest institutional investors, the Company entered into subscription agreements to sell 363,909 shares of its common stock in a registered direct offering at a price of $5.50 per share.

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