FirePower Capital – Company Profile

Mezzanine financing company overview

Mezzanine firm logo:

FirePower Capital - mezzanine financing company logo

Headquarters location:

Canada

Typical mezzanine financing range:

$0.5-5 million

Geographic focus:

Canada

Industry focus:

Industry agnostic

Company profile

Listed in the following regions:

North America Canada

FirePower Capital positions itself as an entrepreneurial investment bank focused on Canadian lower middle-market growth companies. They advise, as well, provide capital to Canada’s entrepreneurs.

FirePower help promising lower mid-market Canadian companies complete mission-critical transactions through two distinct approaches:

  • Investment banking and advisory services
  • Provision of growth loans

Typical transactions include acquiring a competitor, selling to a strategic buyer, or injecting new growth capital from the FirePower’s own funds or those in their network.

Investment banking and advisory services

As investment bankers, they differentiate themselves with entrepreneurial approach and the use of cutting-edge software platforms to execute on multiple transactions simultaneously.

FirePower’s investment banking and advisory services can be separated into two area. These are M&A deal advisory and capital advisory.

M&A deal advisory

The firm works with business owners who are facing an extremely diverse set of challenges, such as making acquisitions, selling a business or a division, turning operations around, financing short-term assets, accelerating growth, buying out existing owners, and many more.

Being an innovative thought leader in investment banking, FirePower challenges the “old ways” by effectively utilizing digital technologies and proprietary databases across multi-functional teams to achieve transparency of our well-defined processes of valuation, case-building and aggressive search for funders and buyers.

Capital advisory

They assist clients in sourcing and structuring the appropriate type of non-dilutive financing.

Typical transaction sizes range from $1 to $30 million.

Provision of growth loans

FirePower’s Private Capital division is a specialist Gap Debt™ lender to fast-growing companies that have limited tangible assets on their balance sheets. They directly invest in and partner with such companies, by structuring creative debt solutions to help their customers achieve their growth objectives.

Investment approach of FirePower’s Private Capital division is described in more detail below.

Investment philosophy/criteria

Conventional thinking is that it is not economically feasible to dedicate the top-notch lending expertise that is necessary to assess smaller transactions that are complex and need a tailored approach to meet a borrower’s requirements. In Canada, furthermore, that expertise is generally not available.

FirePower does not agree with such thinking. Their approach is to invest heavily in technology and processes, such that the can solve the scalability issues that have plagued Gap Debt™ lending. In doing so, they believe they have attracted deep, specialist knowledge and experience—an unmatched team in Canada. Lastly, the firm’s corporate culture celebrates data-driven and scalable entrepreneurship, which makes them a solid long-term partner to help borrowers grow.

Gap Debt™ definition and motivation

In today’s knowledge-based economy, more often than not, fast-growing companies have limited tangible assets on their balance sheets, even if they generate healthy cash flows. In Canada, they have long been frustrated with the lack of financing options available to them, or that those options come up short in terms of creativity and alignment with their strategy.

Without the right capital to fuel their growth, many of those companies simply choose to grow more slowly utilizing internal cash flows or financing from friends & family, which usually leads to lost opportunities and increases the risk of competitors catching up.

In response to this market setting FirePower proposes Gap Debt™. It can be defined as loans of $0.5 – 5 million to growing companies that have strong operating cash flows, or have exceptional short-term visibility into those cash flows, but with limited tangible assets. In other words, these are promising, healthy companies that fall outside the parameters of traditional lenders.

Examples of companies that can benefit from Gap Debt™

The list below is not exhaustive, but it provides example of companies that either have already benefited from Gap Debt™ or are likely to access such form of capital:

  • A specialized equipment manufacturer.
    • Doubled in size for a few years in a row; required $2.0m to fulfill customer orders and meet working capital requirements.
    • Revenue of $6.0m, with breakeven EBITDA.
  • A mobile advertising marketplace, linking brands and their agency partners to optimize the delivery of advertising.
    • Had reached critical mass on its marketplace, and required $2.0m to continue product development.
    • Revenue of $8.5m, with EBITDA of $2.5m.
  • A developer of e-commerce enterprise software for small to medium-sized merchants.
    • Demonstrated significant revenue traction since launch; required $1.0m to grow internationally and develop new software modules.
    • Revenues of c. $3.0m (all recurring), with breakeven EBITDA.
  • A multi-location, premium childcare services business.
    • Had proven the premium business model at 4 locations; required $0.8m to build 3 new locations.
    • Revenue of $10.0m, with EBITDA of $0.7m.

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