Capchase, a Boston-based startup that aims to change the way SaaS companies fund their growth, announced Tuesday it has officially launched thanks to a $4.6 million seed round led by Bling Capital, SciFi VC and Caffeinated Capital.
The idea for Capchase came about when co-founders Miguel Fernández, Luis Basagoiti and Ignacio Moreno were working at an early stage SaaS company together.
In that time, says Fernández, they realized how inefficient traditional financing methods are. To avoid relying on laggy monthly payments, companies will offer hefty discounts to their customers to get them to pay more money upfront, which usually leads to diluted earnings and a harder time upselling later. To make more money, these companies will turn to raising venture debt, but then that could mean losing a portion of the company just to stay financially afloat.
As far as Fernández could tell, there was no alternative solution to this problem. So he and his co-founders made Capchase.
“We don’t take equity and we are not debt. We simply advance revenues that SaaS companies would get in the future from customers they have already won and signed. Now customers can pay monthly — which has a huge value for them — but SaaS companies see all the cash upfront,” Fernández wrote in a recent blog post. “No more cash gaps, no more dilution — and very happy customers.”
Capchase works with SaaS companies of all shapes and sizes and can extend a company’s runway by as much as 60 percent. After a user syncs its financial data to the platform, they will see a projection of what their runway extension will look like after selecting a debt line via the Capchase Runway. Capchase will then extend its terms after going through an underwriting process. The company makes its money off the discounts charged to customers. Discounts vary based on the startup.
This fresh funding will be used to improve customer experience, accelerate the approval process and increase the size of advances to each customer. Capchase is also hiring, looking mainly to grow its engineering and marketing teams. While the company is based in Boston, it says the company operates on a “remote first” model.
