Capchase Lands $125M Series A To Help Founders Avoid Dilution

Capchase closed a $125 million Series A as the New York-based company looks to expand its nondilutive funding platform and offerings to founders.

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The round was a mix of equity and debt and was led by QED Investors. Additional investors in the round include Bling Capital, SciFi VC, Caffeinated Capital and several angels. Capchase has now raised nearly $190 million in a mix of debt and equity, according to Crunchbase data.

The company launched its platform eight months ago as an alternative to venture funding for founders — which can be expensive and dilute ownership stakes. It offers upfront capital to companies with recurring revenue. The loan is based on a company’s annual recurring revenue minus what is typically a 5 percent to 10 percent discount. An example would be a company with $10,000 in monthly recurring revenue; Capchase may pay out $108,000 for the total $120,000 ARR in return.

Since launching, Capchase has issued more than $390 million in financing to over 400 companies and expects to grow by 400 percent over the next six months.

“The market is crazy,” said Miguel Fernandez, co-founder and CEO. “Founders are flocking to this type of model.”

New features and geographies

Capchase plans to use the new funds to keep adding enhancement to its lending platform. Earlier this year, the company introduced a programmatic feature that ideally allows companies to receive the exact amount necessary to reach their goals based on their revenue growth and future plans.

“You don’t want to take out funding you are not using,” Fernandez said.

The company also plans to use the proceeds to expand operations across the ocean in the U.K. and Spain. While the tech startup market is only about 40 percent of the size of the U.S. market, Fernandez said founders there also are looking for alternatives to more expansive venture capital.

Companies offering alternative methods to fund startups have become more popular as firms like Austin-based Founderpath and Los Angeles-based Pipe have emerged, looking to lend based on a company’s monthly, quarterly or annual recurring revenue.

Matt Burton, partner at QED Investors, has watched the fintech sector for more than a decade and said the B2B fintech market is now starting to get caught up in the wave of growth and innovation the consumer — or B2C — fintech sector has been riding for years.

“All that innovation is starting to bleed into B2B,” he said.

Illustration: Li-Anne Dias.