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7GC & Co. Holdings Inc. *

7GC & Co. Holdings Inc. *

Dec 7, 2020 by Matt Cianci

PROPOSED BUSINESS COMBINATION: Banzai International, Inc.

ENTERPRISE VALUE: $380 million
ANTICIPATED SYMBOL: TBD

7GC & Co. Holdings Inc. proposes to combine with Banzai International, Inc.

  • Banzai is an enterprise SaaS Video Engagement platform used by thousands of marketers to power webinars, trainings, virtual events, and on-demand video content.
  • On a mission to make marketing more human, Banzai makes it easy for marketers to create, grow, and track ROI on live and hosted video content by targeting new audiences and deepening customer and prospect relationships.
  • Banzai customers include Square, Hewlett Packard Enterprise, Thermo Fisher Scientific, Thinkific, Doodle and ActiveCampaign, among thousands of others.

SUBSEQUENT EVENT – 12/13/23 – LINK

  • On December 12, 2023, 7GC & Co. Holdings Inc. (7GC) agreed to a term sheet with Yorkville Advisors for a Standby Equity Purchase Agreement (SEPA)
    • This agreement allows 7GC to sell up to $100 million of its Class A common stock to Yorkville, with the amount potentially increasing by mutual consent.
    • The agreement includes provisions for advances that 7GC can request, based on stock trading volume and a limit to prevent Yorkville from owning more than 9.99% of 7GC’s voting power.
    • The purchase price for these advances is set at a percentage of the stock’s volume-weighted average price on the Nasdaq, with two pricing options.
    • Additional clauses cover limitations on stock ownership, fees payable to Yorkville, and a convertible promissory note from Yorkville to 7GC.
    • The promissory note has specific conversion rates and redemption options, with provisions for repayment under certain stock price conditions.
    • 7GC must file a registration statement for the resale of shares under the SEPA, without which they cannot request further advances.
  • GEM Waiver
    • On the same day as the SEPA agreement, December 12, 2023, Banzai International, Inc. (Banzai) and GEM Global Yield LLC SCS and GEM Yield Bahamas Limited (GEM) also reached a binding agreement to terminate their previous Share Purchase Agreement from May 27, 2022.
      • This termination retains one condition:
        • Banzai must issue GEM a warrant to purchase 3% of its total equity interests (calculated on a fully diluted basis) as of the closing date of their business combination.
        • The warrant’s exercise price is set by the terms of the original agreement.
      • In exchange, GEM will provide Banzai with a $2.0 million convertible debenture (a type of debt instrument) that matures in five years and carries a 0% interest rate.
      • GEM has the right to convert this debenture into Class A Common Stock of Banzai, either at will or automatically at maturity, at a price lower of $10.00 per share or the average of the three lowest closing bid prices in the 40 days before conversion.
      • Banzai retains the right to redeem this security at any time with 30 business days’ notice, at a cost of 145% of its principal amount.
      • Banzai committed to file a resale registration statement with the SEC within 60 days post-closing for the resale of the Class A Common Stock underlying this security.
        • If this registration is not effective within 60 days of closing, Banzai agreed to pay GEM $2.0 million within the following business day.

SUBSEQUENT EVENT – 8/7/23 – LINK

  • Amendment to Business Combination Agreement:
    • The SPAC and Hyros agreed to terminate the Hyros Purchase Agreement. The closing of the transactions contemplated by the Merger Agreement is no longer conditioned upon the consummation of the Hyros Acquisition.
    • The value of the total consideration payable to Banzai stockholders (which will consist solely of newly issued shares of 7GC common stock) is reduced from $293.0 million to $100.0 million, with no post-closing “earn-out” or other future contingent consideration.
    • The “Termination Date” upon which either party may terminate the Merger Agreement for any reason if the closing of the Transactions has not yet occurred is extended to December 28, 2023.
    • The $100.0 million minimum aggregate transaction proceeds condition is replaced with a $5.0 million minimum net cash condition.
    • The deadline for Banzai to deliver its PCAOB audited financial statements to 7GC for inclusion in 7GC’s Registration Statement on Form S-4 in connection with the Transactions is extended to August 31, 2023.
    • The lock-up period has been amended so that the Sponsor’s shares will be locked up until 180 days after the Closing.
    • The Sponsor entered into a Sponsor Forfeiture Agreement pursuant to which, contingent upon Closing, the Sponsor agreed to forfeit all 7,350,000 of its private placement warrants.

EXTENSION – 6/29/23 – LINK

  • The SPAC approved the extension from June 28, 2023 to December 28, 2023.
    • 1,747,139 shares were redeemed at the meeting for $10.55 per share.
    • No contribution will be made into the trust account.

SUBSEQUENT EVENT – 6/23/23 – LINK

  • The SPAC entered into a non-redemption agreement with several unaffiliated third parties in exchange for them agreeing not to redeem an aggregate of 250,000 shares
    • The Sponsor will transfer 31,250 Class B shares to the non-redeeming shareholders

SUBSEQUENT EVENT – 6/16/23 – LINK

  • The SPAC entered into a non-redemption agreement with several unaffiliated third parties in exchange for them agreeing not to redeem an aggregate of 247,000 shares
    • The Sponsor will transfer 30,875 Class B shares to the non-redeeming shareholders

EXTENSION – 12/23/22 – LINK

  • On December 21, 2022, The Company’s stockholders approved the Extension Amendment extending the date by which the Company must consummate its initial Business Combination from December 28, 2022 to June 28, 2023.
  • Stockholders holding 17,923,223 shares of the Company’s Class A common stock exercised their right to redeem such shares for a pro-rata portion of the funds in the Company’s Trust Account.
  • Following redemptions, the Company will have 5,076,777 Public Shares outstanding.

TRANSACTION [Terms have been amended please see Subsequent Event from 8/7/23]

  • The combined company is expected to have an estimated post-transaction enterprise value of $380 million, consisting of an estimated equity value of $580 million, $207 million in cash, and $7 million in debt, assuming no redemptions of VII public shares by VII public stockholders.
  • Cash proceeds raised are expected to consist of VII’s approximately $230 million of cash in trust (assuming no redemptions of VII public shares).
  • Banzai is a party to a Share Purchase Agreement with GEM Global Yield LLC SCS and GEM Yield Bahamas Limited (collectively, “GEM”), pursuant to which GEM has agreed to purchase from the Company (or its successor following a merger transaction) up to a number of authorized, validly issued, fully paid and non-assessable shares of Banzai common stock having an aggregate value of $100,000,000, which should allow the combined company post-closing to opportunistically take in additional capital in the event of high redemptions or if additional capital is needed.
  • The business combination has been approved by the boards of directors of both Banzai and VII and is expected to close in the first half of 2023, subject to regulatory and stockholder approvals and other customary closing conditions.

banzai overview

SPAC FUNDING [Terms have been amended please see Subsequent Event from 8/7/23]

[Hyros Purchase Agreement has been TERMINATED on 8/7/23]

  • Banzai is a party to a Share Purchase Agreement with GEM Global Yield LLC SCS and GEM Yield Bahamas Limited, pursuant to which GEM has agreed to purchase from the Company (or its successor following a merger transaction) up to a number of authorized, validly issued, fully paid and non-assessable shares of Banzai common stock having an aggregate value of $100,000,000, which should allow the combined company post-closing to opportunistically take in additional capital in the event of high redemptions or if additional capital is needed.
    • The Company entered into the Hyros Purchase Agreement. Pursuant to the terms of the Hyros Purchase Agreement, Hyros Merger Sub will be merged with and into Hyros and shall continue as the surviving company and as a wholly owned subsidiary of the Company (the “Hyros Acquisition”).
    • The Closing of the Business Combination and the Transactions is conditioned on the consummation of the Hyros Acquisition.
    • The aggregate consideration to be paid by the Company shall be an amount equal to
      • (a) $110,000,000 plus
      • (b) if any, an amount equal to
        • (i) $2,500,000 multiplied by
        • (ii) an amount equal to
          • (A) (x) the amount of the annual recurring revenue of Hyros calculated as of the closing of the Hyros Acquisition minus (y) the amount of the annual recurring revenue of Hyros calculated as of November 30, 2022 divided by
          • (B) $600,000, subject to certain adjustments contained in the Hyros Purchase Agreement, including deductions for working capital, indebtedness, and certain unpaid third-party expenses.
    • For a period of 90 days following the closing date of the Hyros Acquisition, and after consummation of the Business Combination, if 7GC reasonably determines that it has sufficient cash on its balance sheet, after taking into account all then-outstanding liabilities of 7GC (including any liabilities incurred by or on behalf of 7GC and its affiliates in connection with the Business Combination), then the Stockholder Representative will have the right to require that 7GC redeem, from each Hyros stockholder who received shares of Banzai common stock at the closing of the Hyros Acquisition and then 7GC New Class A Shares as a Pre-Closing Holder at the Closing, a number of shares of 7GC up to a specified maximum per stockholder for payment of an amount in cash calculated in accordance with the Hyros Purchase Agreement.

LOCK-UP [Terms have been amended please see Subsequent Event from 8/7/23]

  • Company and Sponsor
    • Six months following the Closing Date

EARNOUT [Terms have been amended please see Subsequent Event from 8/7/23]

[There is no longer any Earnout Consideration]

  • The Company Earn Out Shares will vest upon the occurrence of the following triggering events:
    • (i) 1,950,000 of the Earn Out Shares will vest if the closing price of the 7GC New Class A Share is greater than or equal to $12.00 over any 20/30 trading day period
    • (ii) 1,950,000 of the Earn Out Shares will vest if the Closing Price of the 7GC New Class A Shares is greater than or equal to $14.00 over any 20/30 trading day period
    • (iii) 1,950,000 of the Earn Out Shares will vest if the Closing Price of the 7GC New Class A Shares is greater than or equal to $16.00 over any 20/30 trading day period,
  • In each case, prior to the expiry of sixty months following the Closing (the “Earn Out Period”).
  • In addition, if there is a sale of 7GC after the Closing and prior to the expiration of the Earn Out Period that will result in the holders of 7GC New Class A Shares receiving a price per share equal to or in excess of the applicable price per share thresholds described above, the Earn Out Shares will vest in connection with such sale of the Company in the manner set forth in the Merger Agreement.
  • If the applicable triggering event has not occurred prior to the expiration of the Earn Out Period, then all Earn Out Shares which would vest in connection with such triggering event will be automatically forfeited and deemed transferred to 7GC and will be cancelled by 7GC and cease to exist.

NOTABLE CONDITIONS TO CLOSING [Terms have been amended please see Subsequent Event from 8/7/23]

  • The unrestricted cash on the balance sheet of the Company as of immediately prior to the Closing equaling or exceeding $100,000,000. [The $100.0 million minimum aggregate transaction proceeds condition is replaced with a $5.0 million minimum net cash condition]

NOTABLE CONDITIONS TO TERMINATION [Terms have been amended please see Subsequent Event from 8/7/23]

  • The Closing has not occurred on or before June 8, 2023 (the “Termination Date”). [Termination Date extended to December 28, 2023]
  • By written notice from 7GC to the Company if the PCAOB Financials have not been delivered to 7GC in accordance with the Merger Agreement on or prior to March 15, 2023. [Extended to August 31, 2023]

ADVISORS

  • MKM Partners is serving as Capital Markets advisor to VII.
  • Cohen & Company Capital Markets is serving as Capital Markets advisor to VII.
  • Sidley Austin LLP is serving as legal advisor to VII.
  • Roth Capital Partners LLC is serving as financial advisor to Banzai.
  • Cooley LLP is serving as legal advisor to Banzai [legal advisor when deal was announced].
  • Gateway Group is serving as Investor Relations and Public Relations for the transaction.

MANAGEMENT & BOARD

Executive Officers

Jack Leeney, 35
Chairman of the Board, Chief Executive Officer and President

Since September 2016, Mr. Leeney has served as a Founding Partner of 7GC, and is responsible for running the firm’s operations. Mr. Leeney led the firm’s investments in Cheddar TV, Capsule Pharmacy, hims & hers, Jyve, Roofstock, The Mom Project, and Reliance Jio. He currently serves as a director for The Mom Project, PTAC and PTIC. Between April 2011 and December 2016, Mr. Leeney served on the boards of directors of Quantenna Communications, Inc. (NASDAQ: QTNA), DoAt Media Ltd. (Private), CinePapaya (acquired by Comcast), Joyent (acquired by Samsung), BOKU, Inc. (AIM: BOKU), Eventful (acquired by CBS) and Blueliv (Private). Previously, Mr. Leeney served as the Head of U.S. Investing for Telefonica Ventures between June 2012 and September 2016, the investment arm of Telefonica (NYSE: TEF), as an investor at Hercules Capital (NYSE: HTGC) between May 2011 and June 2012 and began his career as a technology-focused investment banker at Morgan Stanley in 2007, where he worked on the initial public offerings for Tesla Motors, LinkedIn and Pandora. Mr. Leeney holds a B.S. from Syracuse University. Mr. Leeney is well qualified to serve as director due to his extensive venture capital experience.

Christopher Walsh, 29
Chief Financial Officer, Chief Operating Officer and Secretary

Since September 2020, Mr. Walsh has served as a Vice President at 7GC, where he is responsible for sourcing new investment opportunities and due diligence for all fund investments. Mr. Walsh assisted with the successful launch of Empros Capital in 2016, a boutique merchant bank that worked with pre-IPO and growth-stage technology companies, where he worked until 2019. Mr. Walsh played an active role in working with Empros Capital’s portfolio companies, working closely with management teams of several “Unicorn” companies within the FinTech, Enterprise Software, Online Marketplace, and Mobility verticals. Mr. Walsh began his career as a technology investor at Disruptive Technology Advisers in 2015, where he invested and advised growth stage companies including Palantir Technologies. Mr. Walsh holds a B.A. degree from Wesleyan University.

Board of Directors

Thomas D. Hennessy, 35
Director

Since November 2019, he has served as the Chairman, Co-Chief Executive Officer and President of PTAC, a special purpose acquisition company targeting businesses in the real estate technology industry, which in July 2020 announced the entry into a definitive agreement for an initial business combination with Porch.com, which is currently expected to close in the fourth quarter of 2020. He has also served as the Chairman, Co-Chief Executive Officer and President of PTIC, a special purpose acquisition company targeting businesses in the real estate technology industry since August 2020. Mr. Hennessy has served as the Managing Partner of Real Estate Strategies of Hennessy Capital LLC since July 2019. From September 2014 to July 2019, Mr. Hennessy served as a Portfolio Manager of ADIA, the largest global institutional real estate investor, where he was responsible for managing office, residential, and retail assets in the U.S. totaling over $2.1 billion of net asset value or $5.0 billion of gross asset value. While at ADIA, Mr. Hennessy executed over $475 billion of equity commitments to U.S. acquisitions and developments and over $435 million of limited partner equity commitments to opportunistic real estate equity funds, real estate credit funds, and real estate technology venture capital funds. Mr. Hennessy also created and led ADIA’s PropTech investment mandate, which included committing equity to PropTech. From January 2011 to April 2014, Mr. Hennessy served as an associate at Equity International Management LLC, an opportunistic real estate private equity fund founded by Sam Zell, where he evaluated investments and structured equity investments in real estate operating platforms in emerging markets. From September 2009 to January 2011, Mr. Hennessy served as an associate for CERES Real Estate Partners LLC, a private investment management company. From June 2007 to June 2009, Mr. Hennessy served as an analyst in the investment banking division of Credit Suisse, where he focused on mergers and acquisitions for companies in the real estate, gaming, lodging and leisure sectors as well as public and private financings of equity, debt and structured products. Mr. Hennessy is the son of Daniel J. Hennessy, one of our advisors. Mr. Hennessy holds a B.A. degree from Georgetown University and an M.B.A. from the University of Chicago Booth School of Business.

M. Joseph Beck, 35
Director

Since November 2019, he has served as the Co-Chief Executive Officer, Chief Financial Officer and a director at PTAC. He has also served as the Co-Chief Executive Officer, Chief Financial Officer and a director of PTIC since August 2020. Mr. Beck has served as the Managing Partner of Real Estate Strategies of Hennessy Capital LLC since July 2019. From August 2012 to July 2019, Mr. Beck served as a Senior Investment Manager of ADIA, where he was responsible for managing office, residential, industrial and retail assets in the U.S. totaling over $2.7 billion of net asset value or $3.6 billion of gross asset value. While at ADIA, Mr. Beck executed over $2.2 billion of equity commitments to U.S. acquisitions and developments and over $400 million of limited partner equity commitments to opportunistic real estate equity funds and real estate credit funds. Mr. Beck also led an internal restructuring of a seven-asset, $3.5 billion gross asset value portfolio at the ADIA. From July 2008 to August 2012, Mr. Beck served as an analyst in the Investment Banking Division of Goldman, Sachs & Co., where he focused on mergers and acquisitions for companies in the real estate sector as well as public and private financings of equity, debt and structured products. Mr. Beck holds a B.A. degree from Yale University.

Courtney Robinson, 36
Director

She has served as a director of PTAC since November 2019 and as a director of PTIC since December 2020. Since October 2014, Ms. Robinson has served as a Founding Partner of Advance Venture Partners LLC, a growth stage venture capital firm, and is responsible for the firm’s consumer investment practice. Ms. Robinson led the firm’s investments in Bellhops, a technology-enabled moving service; Brandable, a portfolio of CPG brands; Curology, a personalized skincare provider; Modsy, an interior design marketplace; Rent the Runway, a subscription clothing business; and Sawyer, an education marketplace. Between December 2011 and October 2014, Ms. Robinson was a Founding Principal at American Express Ventures, the investment arm of American Express (NYSE: AXP), and before that, served as Director of Business Development at Plum District, a local commerce marketplace, between February 2011 and December 2011. She began her career as a technology-focused investment banker at GCA Savvian Advisors LLC in 2006. Ms. Robinson holds a B.A. from Columbia University.

Tripp Jones, 40
Director

Since May 2011, Mr. Jones has served as a General Partner of August Capital, a venture capital firm, where he is responsible for the firm’s Special Opportunities funds. Mr. Jones has led the firm’s investments in ADARA, BARK, CommonBond, Compology, Hipcamp, Paperless Post, Quandl, Revel, Rocketmiles, Spacious, Sun Basket, Wattpad, and Yumi. He currently acts a director of Yumi, Sun Basket, Cosmopology, CommonBond.io, Paperless Post, Bark and Adara, and acts as a board observer for Hipcamp and Sendbird. From October 2013 to August 2019, Mr. Jones served on the boards of directors of Spacious.com (acquired by WeWork), Quandl (acquired by Nasdaq), RJMetrics (acquired by Magento Commerce), and RocketMiles (acquired by Priceline). Between June 2007 and May 2011, Mr. Jones served as a Senior Associate at Spectrum Equity Investors, and between August 2005 and June 2007, served as an analyst at JMP Securities. Mr. Jones began his career as an investment banker at BMO Capital Markets. Mr. Jones holds a B.A. from Princeton University.

Kent Schofield, 40
Director

Since April 2017, Mr. Schofield has served as the Financial, Planning, and Analysis team leader at Uber Technologies, Inc., or Uber (NYSE:UBER). Mr. Schofield also was head of investor relations in 2019, before, during, and after Uber’s initial public offering in May 2019. Between September 2010 and June 2015, Mr. Schofield served as a Vice President and lead equity analyst at Goldman Sachs within the TMT division. From December 2006 to September 2010, Mr. Schofield served as an associate equity research analyst at Citigroup, where he covered Software, Enterprise Information Technology and Hardware sectors. Mr. Schofield began his career as an equity research analyst at Prudential Securities in 2004. Mr. Schofield holds a B.A. in Economics from UCLA.

Patrick Eggen, 45
Director

Since March 2018, Mr. Eggen has served as a Founding General Partner of Counterpart Ventures, an early stage venture capital firm. Mr. Eggen led the firm’s investments in Sense360, data insights platform (acquired by Medallia in 2020), Particle, IoT platform for the enterprise, Cloudbeds, hospitality management platform and Prismo Systems, cybersecurity software for the enterprise. Between February 2005 and March 2018, Mr. Eggen was a Managing Director at Qualcomm Ventures where he oversaw North America investment strategy and founded their Global Early Stage Fund, whose investments included Zoom (NASDAQ:ZM), Cruise (acquired by General Motors), 99 (acquired by Didi), Matterport, Noom and SwiftNav. Additionally he co-sponsored investments in Ring (acquired by Amazon) and Waze (acquired by Google). Prior investments (exits) include Aicent, Avaak (acquired by NetGear), Divide (acquired by Google), Clicker (acquired by CBS), Magisto (acquired by IAC), Tempo.AI (acquired by Salesforce), ThinkNear (acquired by Telenav) and Viewdle (acquired by Google). From July 1998 to September 2001, Mr. Eggen served as an analyst in the Investment Banking Division of Salomon Smith Barney, where he focused on mergers & acquisitions and capital raising advisory in the Global Telecommunications team. Mr. Eggen holds a B.A. from Northwestern University and a M.B.A. from the Northwestern Kellogg School of Management. Mr. 

 

ByMatt Cianci