Founders First Capital Partners Closes $18.59 Million for Fund Refinancing High-Cost Small Business Debt
Change Catalyst Fund II, which has a $50 million target, provides non-dilutive growth capital to service-based small businesses generating $500,000 to $10 million in annual revenue, aiming to replace merchant cash advance debt with structured private credit.
SAN DIEGO — Founders First Capital Partners has closed $18.59 million toward its Change Catalyst Fund II, a private credit vehicle aimed at refinancing high-cost merchant cash advance debt held by small, service-based businesses. The fund has a $50 million target and is still raising, meaning the closed amount represents roughly 37% of its goal so far.
The fund is targeted at businesses generating between $500,000 and $10 million in annual revenue — a segment the firm says is frequently underserved by traditional bank lending and ends up relying on merchant cash advances, a form of financing that can carry very high effective interest costs when annualized. Founders First describes its capital as non-dilutive, meaning it does not require business owners to give up equity in exchange for financing, distinguishing the fund from venture or growth-equity capital.
Founders First has positioned the fund explicitly around serving "underinvested communities," and the company frames the refinancing as a way to help entrepreneurs avoid what it calls predatory financing terms. The firm has not disclosed the specific interest rates or terms the fund offers borrowers, nor independently verified comparisons against the merchant cash advance rates it says its capital is meant to replace.