Alternative To Venture—Capchase Raises $400M In Debt

Chris Metinko

New York-based Capchase—which is no stranger to large debt raises—closed its largest debt round to date, locking up $400 million to provide funding to startups.

The new round comes just about four months after the nondilutive capital provider raised an $80 million Series B, and almost a year after it closed a $280 million round of debt and equity led by specialty finance firm i80 Group.

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The newly announced financing also is from i80 Group and what the company called “an international banking group” in a release. Capchase now raised nearly $950 million in a mix of debt and equity, according to Crunchbase data.

Capchase now has more than $1 billion to deploy to SaaS startups, it said in a release.

What Capchase brings to the table

The company offers a variety of tools on its platforms that give founders nondilutive financing tools to fund their startups. Its main product—Capchase Grow—enables recurring-revenue companies to access future capital upfront. The loan is based on a company’s annual recurring revenue minus what is typically a 5% to 10% discount.

Earlier this year, Capchase’s co-founder and CEO Miguel Fernandez, told Crunchbase the company was seeing significant new traction due to market uncertainty. It now reports seeing a 50% increase in demand from April to May of this year.

In March, Fernandez said Capchase had worked with nearly 3,000 companies in the U.S. and Europe—making over $2 billion in funding available—since launching in 2020, and watched its ARR increase 2,300% last year.

Alternative financing

It has been well documented that the venture market is not what it was last year, as valuations have been slashed and funding is down.

Such a market may force startups to look more closely at alternative financing tools such as venture debt, shared earning agreements and revenue-based financing.

The alternative financing sector has grown recently, as companies such as Toronto-based Clearco, Miami-based Pipe and Austin-based Founderpath all have raised money in the last couple years.

In past years, such tools proliferated in popularity as founders tried to avoid dilution and loss of control of their companies in a hot market with investors waving cash at them.

Now those tools could become a necessary part of survival where money is much tougher to come by.