The US-based fintech will use the mix of debt and equity to improve its core products, add new features, and expand to the UK and Spain, per PR Newswire. Capchase gives B2B software as a service (SaaS) companies between seed and Series C stage access to cash based on their future recurring revenues. The fintech draws the cash directly from its balance sheet.
Capchase’s financing is proving popular among SaaS firms as an alternative to diluting ownership or having to repay interest. Traditional equity capital raises and loans fuel short-term growth but can also reduce startup founders’ ownership of their companies and saddle them with high-interest debt—especially for untested seed-stage firms. Rather than take equity or charge interest, Capchase gives firms 90%–95% of their total annual recurring revenues and pockets the difference. Business is already booming: Capchase has already issued more than $390 million in financing to over 400 companies just eight months after launch, and it expects to have grown 400% by the end of the year.
Capchase’s balance sheet model may limit its scale compared with its fast-growing peers: