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Financing SaaS

Financing SaaS
July 25, 2022

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It have been only two years since New York-headquartered Capchase launched in May 2020–now, the growth-financing company has raised $1BN of capital to lend to thousands of SaaS (software-as-a-service) start-ups and tech-enabled companies across the U.S. and Europe. 

The new round, led by specialty finance firm i80 Group and an undisclosed international banking group, comes just four months after the company raised an $80MM Series B and about a year after it closed a $280MM round of debt and equity, based on PrivCo's data. The syndicate was joined by a committed roster of VC investors, including QED Investors, Bling Capital, SciFi VC, 01 Advisors, and Caffeinated Capital


This new traction is during a year of market volatility when VC equity has fallen by volumes, has seen some significant down rounds, and valuations have been slashed. “There is a huge demand for alternative funding. This demand is only increasing as well-run SaaS start-ups look for capital to continue to grow during these uncertain economic conditions,” says Henrik grim, MD of Capchase.

Solving for SaaS
With over 2,400 SaaS companies founded in the U.S. alone in the last five years, their subscription-based business models often lead to cash flow problems for the smaller and new entrants to the market – which is what makes this non-dilutive capital provider an attractive alternative to funding or venture debt. 

Capchase extends an immediate line of credit to companies to access future capital with the loan amount based on the company’s annual recurring revenue discounted, in most cases, 5% - 10%. Companies that work with Capchase are therefore able to receive their ARR number fast (in as little as two days) and secure funding in one lump sum that doesn’t dilute ownership. Moreover, Capchase Analytics gives them access to a personalized dashboard with up-to-date financial metrics where users can “better understand their business growth trends, forecast the future, make profitable decisions, and feel confident in timing their raises.” says Capchase CEO Miguel Fernandez.

Unlike typical venture debt requirements, Capchase funding doesn't require SaaS companies to have raised equity funding to back the Capchase loan, and this option doesn’t have covenants or warrant coverage. Capchase’s model strikes us as an appealing, quicker, more flexible, and independent solution.

Capchase is one of a handful of platforms lending capital based on recurring revenue. Competitors like San Francisco-based Clearco and Austin, Texas-based Founderpath have also had funding rounds over the last couple of years.

Since last week, PrivCo has added:
1,386 Companies | 203 Funding Activities | 179 M&A Deals

Funding & Deal Highlights:

Hashflow raises $25MM from Dragonfly

Fintech • Round A • San Francisco, CA

Zededa raises $26MM from Lux Capital

Cloud • Round B • San Jose, CA

Optic raises $11MM from Kleiner Perkins

Blockchain • Seed • San Francisco, CA

TomoCredit raises $22MM from Morgan Stanley

Fintech • Round B • San Francisco, CA

IQM raises €128MM from World Fund

Electrical Engineering • Round A-2 • Espoo, Finland

Alt raises $200MM from Atalaya Capital

Fintech • Debt • San Francisco, CA

Whatnot raises $260MM from DST Global

E-Commerce • Round D • Marina Del Rey, CA

Theator raises $24MM from Insight Partners

Digital Health • Round A • San Mateo, CA

CivicEye raises $12.4MM from Cercano

Cloud • Round A • Charlotte, NC

AeroVanti raises $9.8MM from Network1 Financial

Aviation • Round A • Annapolis, MD

SourcePass acquires SSD Technology

IT Consulting • Acquisition • Wilmington, DE

Inszone Insurance Services acquires Young Insurance

Insurance • Acquisition • Greensboro, NC

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