Growth Capital for SaaS
Since its founding, DH Capital has leverage its industry expertise to identify innovative financing alternatives for its clients. Our affiliate, SaaS Capital Partners, allows us to extend our mission and serve the unique needs of companies offering Software-as-a-Service (SaaS) and other cloud-based businesses.
About SaaS Capital
Traditional lenders view emerging SaaS companies under an underwriting lens that focuses on hard assets and profits. SaaS Capital, in contrast, focuses on the stability of a company’s revenue stream and its capacity to generate positive cash flow when necessary.
SaaS Capital typically lends under a credit facility that scales with the recurring revenue stream of the business. Loan amounts range from $1 million to $4 million with larger facilities available through syndication partners. SaaS Capital’s unique approach to growth capital offers several advantages.
- Since the credit facility is based on future revenues, the total amount of available capital increases as the business grows, effectively providing negative amortization.
- A company can elect to draw down capital only when it’s needed and thereby reduce its overall borrowing cost.
- A SaaS Capital line typically provides access to significantly more capital than a bank facility.
This structure is unique to SaaS Capital and more conducive to supporting growth than Venture Debt term loans with large up-front advances and heavy amortization.
Potential SaaS Capital porfolio companies should contact SaaS Capital directly. SaaS Capital is a growth-based facility and, therefore, is not appropriate for start-ups without an established revenue stream.
What’s Your Company Worth?
Download our newest white paper written for entrepreneurs, angel investors, and the management teams of SaaS businesses. The intent of the paper is to describe a valuation framework that stakeholders can use to more clearly articulate the value of their business as they negotiate with investors or buyers. The paper also explores the role of strategic advisors – particularly investment bankers – in the valuation, money raising, or sale process.
Download the whitepaper >>
Ready to learn more?
Read the full press release about the launch of SaaS Capital’s new fund >>