After only eight months of operation, Capchase has been a surprise success story on Wall Street, offering a uniquely relevant service to startups - non-dilutive capital. Going into the final third of the company’s first year of operation, Capchase has secured funding for future growth to meet the increasing demand for its services.
Capchase was launched to offer an alternative means of funding for startup founders. Startups are normally faced with selling off equity of their company in order to raise funding for growth. This process is quite expensive, and results in the dilution of ownership. According to Miguel Fernandez, Co-founder and CEO of Capchase, “We Built Capchase to help tech companies access the capital they need to grow faster, without selling their company bit by bit.” Capchase does this by offering upfront capital to companies that have recurring revenue. The loan is calculated as what is proven to be a company’s annual recurring revenue (ARR) minus a discount that may range between 5 or 10% of the ARR.
Companies are able to advance their growth through access to future revenues, which opens up a myriad of opportunities from the outset. This saves crucial time in growth, as well as in the outlay of the extensive processes undertaken to raise capital. According to Fernandez “Most common uses for the capital are customer acquisition, hiring top talent, acquiring other companies, consolidating liabilities, and working capital.” As a result, the company has grown tremendously as Fernandez discovers first-hand that “future revenues presents a major opportunity when it comes to funding present growth.” On average, it has been found that a startup’s growth rate increases by more than 50% when working with Capchase. To date Capchase, has issued over $390 million in financing to over 400 companies.
Its premiere funding round raised $125 million, led by QED Investors. Additional investors include Bling Capital, and SciFi VC, as well as numerous operator angels. The new funding is said to help support the company’s expectation to grow by 400% over the next 6 months. It also intends to extend its operations to the U.K. and Spain.