SaaS subscription financing a very exciting space, especially when not every customer has the same set of needs and objectives
SaaS subscription has been around for some time now, yet, it’s one of the most complex business models to master. The shift toward a Cloud-based subscription is showing signs of massive disruption. Customers are willing to pay more for experiences and ease of use, than merely subscribing to the product or feature. This unique CX and service-related model make SaaS subscription financing a very exciting space, especially when not every customer has the same set of needs and objectives. To help such customers, Pipe Technologies (Pipe) was founded in 2019.
According to DataRobot COO Dan Wright, “Today, cash is king where timing is everything. Pipe’s time is now.”
Barely a year into its operations, Pipe has already made a significant impact on the SaaS economy with its subscription financing platform that allows software companies to finance their business without debt or dilution. And, as the world stares at a slowdown due to the pandemic, Pipe has won the attention and faith of its investors, scooping $60 million.
Pipe raised $60 Million to step up its SaaS financing platform for the subscription economy. The funding would be used to further extend its product line, in addition to hiring leaders to fortify its security stance globally.
At the time of this announcement, Co-founder and co-CEO Harry Hurst said,
“We’re fundamentally changing the way SaaS companies fund their growth by treating their subscriptions as a new asset class. Through our financing platform, SaaS companies can turn their monthly and quarterly paid subscriptions into the up-front cash flow they need to grow.”
Harry added, “We’ve invested in building the technology to make the process seamless and instant so that SaaS companies can focus on pitching customers, not investors.”
Seen as a step to boost the SaaS financial platform with new-age security and compliance, the latest Pipe funding would fundamentally transform the way the whole SaaS economy works. With the hiring of its first Chief Operating Officer and Chief Legal Officer, Pipe could make traditional billing platforms a thing of the past. Michal Cieplinski is the new Pipe Chief Operating Officer and Chief Legal Officer.
Today, Pipe is catering to the global SaaS industry by enabling SaaS companies to obtain instant liquidity on their subscription contracts as an alternative to costly and dilutive equity financing.
Since launching its SaaS financing platform in February 2020, Pipe has seen overwhelming demand from early and growth-stage SaaS companies.
The desire to fund growth based on the value of monthly and quarterly recurring revenue assets, rather than raising ever greater amounts of dilutive equity capital or venture debt, has never been stronger. Larger SaaS companies also leverage Pipe to offer more flexible monthly or quarterly payment terms to customers that were previously forced to be annual pre-paid, an attractive and increasingly necessary alternative as businesses nationwide face economic instability.
Pipe SaaS Financing Platform Opens Up Viable Opportunities in 2020
Subscriptions are the new asset class. By launching the SaaS subscription financing platform, Pipe is redefining the future of SaaS. It creates an opportunity for Cloud and SaaS software companies to convert their monthly or quarterly subscriptions to their full annual value in cash, up-front.
On the other side of the platform, Pipe’s investor partners, a vetted group of financial institutions and banks, get access to alternative investments in the form of highly predictable, recurring revenue-generating assets, much like fixed-income products.
Pipe integrates deeply with the SaaS companies’ own ERP and subscription management software, allowing them to finance their subscription assets seamlessly and instantly.
Historically such financing has only been available through securitization markets for traditional assets such as mortgages. With the launch of this platform, Pipe brings this innovation to the cloud services market for the first time.
Fueling Pipe’s Growth with $60 Million in Financing
Pipe today announced $60 million in equity and asset financing. The seed extension round was led by Fin VC with participation from new investors Tribe Capital, Uncorrelated Ventures, Lachy Groom, Anthemis, and existing investors Craft Ventures, Fika Ventures, and MaC Ventures.
The new round will finance Pipe’s rapid growth, expand operations into new markets, and represents a significant commitment of capital to the buy-side of its platform from KSD Capital.
“We believe Pipe’s subscription finance platform will radically transform the global SaaS business model, providing liquidity that will generate a tidal wave of growth and innovation for SaaS companies and positioning subscription contracts as a new and highly valued asset class for global investors,” said Peter Ackerson, Investment Partner at Fin VC.
“Pipe has cracked the code for SaaS companies to scale – providing growth capital without dilution or debt. It’s a privilege for us to partner with such a talented team,” said Will Davis, President & Managing Director of KSD Capital.
Security and Compliance in Instant Cash Management: Adding a New COO and Chief Legal Officer
Pipe today announced the appointment of Michal Cieplinski as the company’s Chief Operating Officer and Chief Legal Officer. Michal brings years of experience in financial services technology and operations to his role at Pipe, having served as General Counsel at LendingClub, a publicly-traded fintech company, as well as in operational, legal, and compliance roles at high-growth startup Fundbox.
“Michal is a passionate leader and strategic operator who shares the same drive and principles as the Pipe founding team,” said Josh Mangel, Pipe’s co-founder, and co-CEO.
Josh added, “He brings unique, valuable experience to our leadership team, and we’re excited to have him on board as we build and scale Pipe.”
“Pipe has the opportunity to re-shape the entire cloud services industry with a completely new approach to how companies are funded and grow,” said Michal Cieplinski.
Michael added, “Pipe already offers a unique value proposition to the booming SaaS industry, but the vision is much bigger than the work Pipe is doing today. We’ve started with reimagining funding, but ultimately want to be a larger one-stop solution for SaaS services.”
Pipe was founded in September 2019 by Harry Hurst, Josh Mangel, and Zain Allarakhia. Pipe is backed by Craft Ventures, Fin VC, Uncorrelated Ventures, MaC Ventures, Tribe Capital, Fika Ventures and Lachy Groom. The company has offices in Los Angeles and San Francisco.