SaaS has grown to enormous proportions, as a business model. Last week several big SaaS companies filed to go public, and thousands of SaaS startups are now rising around the world. This size makes it possible for banks and financial institutions to deliver tailor-made options for anything from equity and debt to the market.
Over the last few weeks, we’ve spoken a little about SaaS securitization, a variety of modern financial instruments that use a SaaS company’s metrics to underwrite the leverage (e.g. higher turnover = more funding available and higher terms) as compared to conventional measures such as gross sales and age of businesses. We also had a deep dive with Kentik CEO Avi Freedman into how he handled his latest venture debt fundraise and the terms he got from his five-term sheets (Extra Crunch membership required).
These days, every SaaS organization is considering its financing options and the trade-offs between equities and debts. But then they only need cash, and cash as soon as they can. Startups sign contracts with consumers that may be paying for over a year or more, but now they want to use the cash, and at the best possible terms. The tool that fixes this issue is known as an account receivable sheet, and with all the drudgery of the process, you will go to several banks to get them.
Capchase is an online forum for collecting cash easily from your receivables accounts. Startups send to Capchase key information of their client contracts and financial records, and the firm uses its underwriting software to easily determine the efficiency of those contracts and expand a debt line. The firm is considering itself part of the “non-dilutive movement,” and is based in Boston.
Earlier this year, he liaised with three other creators to create Capchase: Luis Basagoiti, Ignacio Moreno, and Przemek Gotfryd. Despite its early history of activity, the company has already easily earned its capital. It closed with $4.6 million in seed funding from VC led by Caffeinated Capital, Bling Capital, and SciFi VC, along with BoxGroup, ONEVC, and a host of angels.
Startups frequently turn to bargain deals for their buyers to get cash early now, giving discounts — sometimes huge discounts — for them to pay the amount of a whole deal upfront. Fernández sees a chance to arbitrate with Capchase on the disparity between interest rates and certain concessions. In terms of growth, he said “we are dealing with about 3-4 clients.”
From the user’s view, after synchronizing the financial details of their company with Capchase, they can see a prediction on what their runway extension looks like after picking a debt line, and then Capchase can expand its terms after going through an underwriting process.