SaaS Capital, a company providing growth debt to software-as-a-service (SaaS) firms, has raised $128 million for its fourth fund.
“The stage of growth from $1 million to $20 million in annual recurring revenue is incredibly value-creating for founders and shareholders of SaaS companies,” Rob Belcher, managing director, said in an announcement on the company’s website.
“SaaS Capital’s recurring revenue-based credit facilities provide access to significant and flexible growth capital to companies in this phase, without the need for management to give up equity or control.”
The company says it has provided more than $200 million in growth debt to nearly 100 companies. The new fund will help “even more companies accelerate growth in an equity-efficient manner,” Belcher said.
Meanwhile, the company has named two new managing directors: Columbus-based Stephanie Fortener and Seattle-based Randall Lucas. Fortener had worked with SaaS Capital partner Steve Jaffee at the early-stage SaaS lending platform Dreadnought Capital, which now becomes part of SaaS Capital with this new fund. Lucas has more than 20 years of expertise at equity investing, alternative lending, and entrepreneurship.
“We are sincerely grateful to our amazing Limited Partners, many of whom have supported us for over ten years and in all prior funds,” said Jaffee. “Their trust in us and our platform is evident in the fact that we surpassed our target amount of $100 million, and even our ’hard’ cap of $125 million. With the larger fund and team, we are excited to accelerate the SaaS Capital mission.”
Read more: Filling SaaS Firms’ Slippery Cash Gaps
PYMNTS looked at the challenges SaaS firms face when seeking funding in 2020 in our conversation with Miguel Fernández Larrea, co-founder and CEO of Capchase.
Larrea noted that when SaaS customers choose monthly payment plays, “there is a cash gap at the beginning, which SaaS companies need to fund in some way.”
That means that although receivables are booked when the customer agrees to make periodic payments, the SaaS company still has to provide service while waiting for payment. And that can spell trouble for SaaS firms seeking working capital, especially if they’re seeking help from banks, Larrea said.
“SaaS is not such a new business model, but traditional banks look at it like any other company,” he told PYMNTS. “When they see negative cash flows and a SaaS company burning cash, banks run away from it.
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