Hercules Technology Growth Capital Inc., which funds young companies, plans to further its West Coast presence with an office it opened in Costa Mesa last month.
The company’s looking to set up shop at 600 Anton Blvd., with credit officer James Crumpton, a former bank executive, heading it.
Hercules Technology was started in 2003. It mostly makes loans to privately held businesses in the technology and life sciences industries.
The company counted a recent market value of about $316 million.
“We’ve always considered Southern Cal-ifornia a place for opportunities to invest in venture tech companies,” said David Lund, chief financial officer.
Palo Alto-based Her-cules Technology has regional offices in Boston, Chicago and Boulder, Colo.
The company does debt financing, loans and lines of credit for businesses to buy equipment or to fund an acquisition.
Loans typically run in the $6 million range, but can be as high as $25 million, Lund said. Hercules Technology did about $283 million in loans in 2006, according to a government filing.
The company targets young businesses that are backed by venture capital or private equity firms. That includes:
n Early stage businesses, which need money to get out of the gates, to develop products or run clinical trials, according to Lund.
n Companies in the expansion stage, which have about $5 million to $20 million in sales but aren’t profitable. This stage usually needs loans to launch marketing campaigns, he said.
n Established stage businesses, which have revenue north of $20 million, are approaching profitability and may need a loan to fund an acquisition, Lund said.
It also lends to public companies that don’t want to do a costly secondary stock offering to borrow money from hedge funds.
Mostly Middle
About 65% of Hercules’ portfolio falls in the middle expansion stage, he said.
“Our focus has been on companies that are in that stage,” Lund said. “We think that there has been a missing opportunity in this space.”
An early stage company might turn to Hercules because banks are limited as to how much they can loan, Lund said.
Funding debt for young companies can be risky, Lund said.
Hercules does a lot of research about the company’s management and venture backers before making a deal, he said.
Those that have tapped Hercules include makers of software, networking systems, chips, information technology providers, telecommunications businesses, drug and medical device makers and healthcare providers.
Recent Deal
One of its recent deals was a $22 million debt financing loan to Tectura Corp., a Microsoft reseller based in Redwood City.
Hercules gets its money from a number of sources.
Much of the company’s money first came from its $78 million initial public offering back in June 2004. Now, the company also borrows from banks and gets federal dollars from the Small Business Administration’s investment company program, Lund said.
The company has about 30 workers altogether. It’s set to have five locally after the Costa Mesa office opens.
