Nobody likes dilution, and that is why each of the founders is exploring alternatives to traditional equity investment by venture capitalists. Financial entrepreneurs have launched a range of products, from SaaS securitization to debt-based financing, that help founders protect against that dilution, especially when they have recurring revenues on the books.
Capchase is one of this new crop of startup-focused fintech companies. It allows startups to derive their future recurring revenue in the form of debt today, allowing founders to spend future money earlier and potentially with at least some of those expensive, dilution rounds Survivors, especially when they are just starting. I outlined a Boston-based company a few months ago when they raised $ 4.6 million in seed led by caffeinated capital.
Now, the company is floating in new funds, and is set to lend to even more startups. This morning, the company announced that it had raised $ 60 million in an “asset-backed credit facility” from the i80 group. That Capchase should allow To expand the number of startups that work with it, as well as the amount of revenue prepayment may possibly expand for each startup.
i80 has made these types of projects for startups an investment firm based on credit underwriting only. In addition to the facility for Capchase and similar fintech underwriting, the group also appropriately returns real estate underwriting projects, where it co-leads the $ 100 million facility with Silicon Valley Bank.
Capchase, which was established in early 2020, claims that its initial customers have raised funds on average by 8 months late and saved around 16% on overall labor. Of course, those numbers will vary widely depending on the startup, its growth, its recurring revenue and other variables.
Capchase’s goal is not just to expand revenue prepayments to startups, but to do it faster, sometimes even in just days or hours, depending on the complexity of its customers’ recurring revenue. With $ 60 million, it has an appetite to lend even faster.