Pipe, creator of a first trading platform for recurring revenue streams, brought in $50 million in strategic equity funding to expand.
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The Los Angeles-based company was started by Harry Hurst, Josh Mangel and Zain Allarakhia in 2019 and launched its software-as-a-service platform in February 2020, which it touts as the industry’s first subscription financing platform.
“We like to say we are building the Nasdaq for revenue,” Hurst told Crunchbase News. “We call this ‘subscriptivication’ of everything. Most businesses are thinking of adding some recurring revenue, whether it be steaming, subscription consumer products or social media digital marketing.”
SaaS subscriptions are a highly predictable source of recurring revenue, and Pipe helps SaaS companies turn their monthly or quarterly subscriptions into upfront cash flow, Hurst said. Its goal is to offer SaaS companies a way to grow without diluting their current cap table.
Even venture capital firms have become Pipe’s customers, trading their management fees as a way to build their business, he added.
The round was led by Siemens, Next47 and Raptor Group, and joined by Shopify, Slack, HubSpot, Okta, Chamath Palihapitiya, Marc Benioff, MSD Capital, Republic, Seven Seven Six and Joe Lonsdale.
“Pipe is levelling the playing field for companies in the capital markets,” said Palihapitiya, founder and CEO of Social Capital, in a statement. “By taking the underlying contracts that generate recurring revenue streams and making them tradable for the first time, Pipe has unlocked a multi-trillion dollar asset class, revenue.”
Since Pipe’s public launch in June 2020, it has experienced massive adoption, such as more than 3,000 companies signing up, as well as tens of millions of dollars traded on the platform in the first quarter of 2021, Hurst said. Tradable annual recurring revenue on the platform is already in excess of $1 billion.
The latest round of funding brings the total equity raised to $66 million, which includes a $60 million seed extension last June. The new funding will be used to expand Pipe’s global footprint and build upon the company’s partnerships, including with its newest investors Shopify, Slack, HubSpot and Okta.
“These companies are providing tools to help their customers grow, but don’t provide the capital, so the partnership will enable them to have skin in the game with Pipe providing the capital,” Hurst said. “This creates for the first time efficiency and an aligned marketplace because we are incentivized to get the best trading for volume. Within the next year we will expand globally. Europe is going to be an important market for us.”
Illustration: Li-Anne Dias
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