Happy Sunday from quarantine. I picked up Covid this week, and after a couple days of sweating and coughing, I think I’m starting to get back to normal. I feel pretty lucky to not have a serious case, take care of yourselves out there!

Today I wanted to share the high level results from the survey we sent to the RBFN community about how you are advising your customers and portfolios. Here are the key takeaways:

Most RBF investors are not changing their minimum requirements for investment, i.e., almost no one has tightened their requirements for a company to receive money. I’m surprised by this; I assumed more firms would raise minimums or tighten requirements more substantially. Upon further reflection, it makes sense though, as we don’t really know what the impact of the broader market will be on the businesses we serve.

As of the date of the responses, there were no obvious impacts on the portfolios of the respondents. That is, no companies were clearly a victim of the turmoil in the economy. This supports the approach taken in the bullet above.

Most of you advised your companies to raise all the capital they can, get to breakeven, and be careful about any large investments. No surprise here – I think everyone has been saying the same thing for a while.

Very few of you are increasing the cost of capital for your customers, i.e., most of you are not increasing multiples or IRRs. This is interesting, and hints at capital sources. If your capital sources are institutional debt, you’d likely need to bump your cost up, but if you are mostly funded by equity, you can get away with holding fast for now.

Most of the respondents believe this is a growth opportunity for RBF. As equity becomes more expensive as a result of declining valuations, and as it becomes more difficult to raise, RBF stands out as a great way for companies to the financing they need. I generally agree with this thought, and I expect we’ll see pretty significant growth in demand for RBF. Key to our collective success will be to stick to our underwriting, so don’t stray too far from your box, friends. Do the good deals!

Enjoy the rest of your holiday weekend!