Meet Capchase – A Non-Dilutive & Non-Debt Financing Specifically Designed For SaaS And Other Recurring Revenue Businesses

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Below is our recent interview with Miguel Fernández, Co-founder, BizDev and Sales at Capchase:

Q: What is Capchase?

A: Capchase is a non-dilutive & non-debt financing specifically designed for SaaS and other recurring revenue businesses.

SaaS founders, when choosing to sign up customers, have two options. Either they let customers pay monthly or they make them pay upfront. Customers clearly prefer to pay monthly, because it’s easier for them. So founders at the beginning of their journey will sign customers on a monthly-payment plan. After all, traction is the key priority early stage. But then, they see that as the SaaSCo bookings grow, the costs increase as well – team, infrastructure, sales & marketing. However, cash trickles in month-after-month. Which means that suddenly SaaSCos are facing a significant cash-gap. To close that gap they need to either slow growth or raise funds. Raising funds is very time consuming and very expensive due to dilution.

After experiencing how expensive it is to let customers pay monthly, SaaSCo founders decide to charge upfront. But customers push back. To incentivize upfront payment, founders end up discounting the product 15-30%. Now they don’t dilute themselves, but they are giving up an important part of their topline.

Capchase solves that exact problem. It allows founders to give their customers the flexibility to pay monthly while getting all the cash upfront through Capchase. This means that founders no longer dilute themselves to fund the growth of their companies and customers are happy because they don’t have to park large sums of cash to pay upfront for a service they will get throughout the year

It’s also very simple to obtain. In 7 minutes, Founders sync their software and they get an offer to advance the SaaSCo deferred revenue for the following 12 months.

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Q: What makes Capchase unique in the market?

A: We are the only financing product designed by SaaS founders for SaaS founders. We have been working in SaaS for the past 3 years and we have designed a tailor-made product that solves the specific pains that SaaSCos feel while scaling.

VC funding is unique in the sense that it adds a lot of value beyond money. Connections, mentorship, introductions, pattern recognition, signaling, etc. That’s why it’s so expensive. But parking VC funding into working capital just to let customers pay monthly doesn’t have a high ROI. VC funding should be used to develop a killer product, hire that 10x engineer or acquihire a player in the space.

Besides VC, every funding option available is not designed for SaaSCos and doesn’t solve the problem of aligning cash flows with revenues and bookings.

Venture Debt is very time demanding to raise. Then the hidden costs are huge – legal fees, opening fees and equity warrants. And the amount raised hardly makes a difference as it’s usually 2-4 multiples of the SaaSCo’s MRR.

Revenue Based Finance is also not optimal for SaaSCos as it’s very expensive and the price is unpredictable. The better the SaaSCo and the steeper the growth, the more expensive RBF is.

Capchase is unique in the sense that it’s approved almost instantaneously, it’s very transparent in pricing and it advances up to 12 multiples of MRR.

Q: You have an interesting background. Can you tell us something more about your previous success?

A: Capchase cofounders have a background as SaaS operators & investors so we know the pain we are solving inside out.

Before launching Capchase I worked in strategy consulting for a couple of years, during which I launched two marketplaces that achieved moderate traction. After that, I joined a pre-revenue SaasCo as the first person in sales. I built the sales and customer success teams and eventually moved to the UK to open up the local office and enter the British market. During the 3 years scaling the SaaSCo, I faced the pain that we are now solving in every single deal.

I left to pursue an MBA at Harvard Business School with the goal of launching a company upon graduation. There, I became passionate about solving working capital and cash conversion cycle pains and researched the topic heavily. That research and the pain that I felt in my previous job clicked together at the beginning of the year and we launched Capchase with two of my ex-colleagues and a friend at HBS.

Q: Can you tell us something about your pricing?

A: Our pricing is very transparent, it’s purely a discount on the deferred revenue advance. There are no hidden fees at all. The discount depends on the risk profile of the SaaSCo.

Also, as part of the service, we inform the SaaSCo of the variables that impact their pricing the most and we help them to improve them in order to get a better pricing. This means that with time as the metrics evolve, the pricing drops.

We are usually much cheaper than the discount that SaaSCos give to get paid upfront by their customers.

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Q: What is next on the roadmap for Capchase?

A: We keep speaking with SaaSCo founders to understand other ways in which we can assist them in their growth. For the next months, we are super focused on building the best revenue advance product in the market. This means simplifying the user experience, making it totally seamless E2E and helping founders to focus only on product development, team and growth.