Capchase Raises $60M to Help Founders Avoid Dilution

Founders generally want to retain control of their companies, which is why many are exploring options beyond traditional venture capital funding. Several financial technology companies have introduced new products – ranging from securitized SaaS agreements to debt financing – designed to help startups sidestep equity dilution, especially those with established, predictable revenue streams.

Capchase is a representative example of these emerging fintech businesses. The company provides startups with immediate access to their anticipated recurring revenue through debt financing, enabling founders to utilize future income now and potentially lessen their reliance on costly, equity-based funding rounds, particularly during the early stages of growth. The company was previously featured in an article a few months prior, following a $4.6 million seed funding round spearheaded by Caffeinated Capital.

The company has now secured a significant influx of capital and is prepared to broaden its lending operations to a larger number of startups. Today, Capchase announced a $60 million “asset-backed credit facility” provided by i80 Group. This funding will allow Capchase to serve more startups and potentially offer larger prepayment amounts for their future revenues.

i80 Group specializes in investment focused on credit underwriting for projects like these within the startup ecosystem. Beyond its support for Capchase and similar fintech companies, the group also invests in real estate underwriting ventures, such as Properly, where it jointly led a $100 million facility alongside Silicon Valley Bank.

Established in early 2020, Capchase reports that its early adopters have postponed fundraising efforts by an average of 8 months and reduced overall equity dilution by approximately 16%. It’s important to note that these figures are subject to considerable variation based on individual startup circumstances, growth rates, recurring revenue levels, and other relevant factors.

Capchase aims to provide revenue prepayment to startups quickly, often within days or even hours, depending on the intricacies of their revenue models. With an additional $60 million in funding, the company intends to accelerate its lending speed even further.