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June 4, 2021

Why QED invested in Capchase


If you are a startup founder, growth is always good, right? Well, not necessarily.

For a category of businesses, growth can put such pressure on operations and cash flow that it can ultimately lead the business to bankruptcy. One of the most well known models in which this is true is SaaS.

SaaS, and other recurring revenue businesses are unique, because the revenue for the service comes over an extended period of time. They can face significant losses in the early years because they have to invest heavily upfront to acquire the customer, but recover the profits from that investment over a long period of time. And the faster the business grows, the worse the losses can become.

If you are a SaaS founder today, you have a couple of options in the market to address your funding need:

  • Offer a 15-30 percent discount for upfront payment from clients which means lowering your booking value
  • Raise equity and incur heavy dilution
  • Raise venture debt and manage rigorous warrants and covenant provisions
  • Sell receivables to a factoring or digital lender which requires a new application each time you need cash

The problem with each one of these options is that they demand a lot of time and effort in each instance that the business needs more funding.

Instead of constantly thinking about how to fund their businesses, we believe founders should be focusing on hiring top talent, executing on their product roadmap, and acquiring new customers.

Capchase was created exactly for that. They enable founders to put their financing needs on auto-pilot so they can focus solely on growing their business.

Founded in 2020, Capchase has developed a proprietary programmatic funding platform that gives predictable revenue businesses like SaaS just the right amount of financing required for growth on a monthly or weekly basis. You simply connect your accounting, payment and banking systems in three clicks and Capchase does the rest. They turn your data into metrics that allow them to estimate and give how much funding your business actually needs.

This way, instead of raising capital in one lump sum, which leads to cash sitting in a bank without generating returns, fast growing SaaS businesses can have the peace of mind that funding is secured at the right amount and at the right time. No dilution, no covenants and no need for new loan applications.

At QED, we have seen many types of tech enabled lenders emerge and invested in dozens of companies in the space across the U.S., Latin America and U.S.

Our years of experience allowed us to see the goods and bads in the industry. Having met hundreds (if not, thousands) of founders in the space, we were absolutely impressed by Miguel Fernandez and the Capchase team. With an incredible tech driven team, a deep understanding of what predictable revenue businesses need and a robust modern technology, we believe lending is just the start of Capchase’s journey.

We couldn’t be more excited to welcome them to the QED family.