Pipe Secures New Funding at $2 Billion Valuation

Fintech company Pipe has recently obtained another round of investment, resulting in a company valuation of $2 billion. This funding arrives shortly after a previous $50 million raise, as reported by sources with knowledge of the transaction.

While the funding round is still in progress, Pipe has reportedly secured $150 million in a round that was significantly oversubscribed. Greenspring Associates, located in Baltimore, Maryland, is leading the investment.

Investment Details and Company Growth

Although a term sheet has been signed, the possibility remains for additional capital to be included. Both current investors and new participants are contributing to this fundraise.

This valuation represents a substantial increase compared to Pipe’s previous funding round. The company, which launched its platform just last June, has not yet publicly commented on the deal.

Over a year ago, Pipe completed a $6 million seed round, spearheaded by Craft Ventures. This initial funding was intended to support the company’s objective of providing SaaS businesses with funding options beyond traditional equity or venture debt.

Pipe’s Innovative Funding Model

The startup’s core concept involves enabling SaaS companies to access their revenue in advance. This is achieved by connecting them with investors through a marketplace that offers a discounted rate for the annual value of their contracts.

Pipe characterizes its investor base as “a vetted group of financial institutions and banks.”

Just weeks prior, Pipe announced a $50 million “strategic equity funding” round. This raise included prominent investors such as Siemens’ Next47 and Jim Pallotta’s Raptor Group.

Expanding Beyond SaaS

Notable participants in this earlier round also included Shopify, Slack, HubSpot, Okta, Social Capital’s Chamath Palihapitiya, Marc Benioff, Michael Dell’s MSD Capital, Republic, Alexis Ohanian’s Seven Seven Six, and Joe Lonsdale.

Harry Hurst, Pipe’s co-CEO and co-founder, stated that the company was expanding its platform’s reach beyond solely SaaS companies. The aim is to include any business with a consistent recurring revenue stream.

Broadening Revenue Streams

This expansion encompasses D2C subscription services, internet service providers, streaming platforms, and telecommunications companies. Even venture capital fund administration and management services are utilizing the platform, according to Hurst.

Initially, Pipe focused specifically on the SaaS market. However, over 3,000 companies have since registered to utilize the platform.

These companies vary in size, ranging from early-stage, bootstrapped businesses with $200,000 in revenue to publicly listed corporations.

Platform Functionality and Trading Volume

Pipe’s platform evaluates a customer’s key performance indicators by integrating with their accounting, payment processing, and banking systems.

This integration allows for an immediate assessment of the business’s performance and determines a trading limit. Current trading limits range from $50,000 for smaller, early-stage companies to over $100 million for larger, publicly traded entities.

There is no upper limit on the potential size of a trading limit.

During the first quarter of 2021, the Pipe platform facilitated trades totaling tens of millions of dollars. From its launch in late June 2020 through the end of the year, the marketplace also processed “tens of millions” in trades.

The total tradable Annual Recurring Revenue (ARR) on the platform currently exceeds $1 billion.