Efficient Capital Labs (ECL), a leading revenue-based financing provider that provides non-dilutive capital to B2B SaaS companies operating in the South Asia-U.S. corridor, announced an $11 million Series A fundraising co-led by QED Investors and 645 Ventures. This funding round included participation from existing investors Riverside and Generalist, as well as new investors FJ Labs and Eudemian Ventures.
This funding round will be used to expand into Singapore and other Southeast Asia markets, building on the successful traction seen in the U.S. and India, where ECL has originated more than $70 million in financing and tripled to serve over 100 companies over a year from Q1 2023 to Q2 2024.
ECL has increased its accounts receivable outstanding sixfold from 2022 to 2023. In the first six months of this year, the company has already doubled that number again, partly because of default rates way below industry standards and a 70% repeat rate of customers taking additional financings.
ECL currently lends to cross-border companies with at least one entity in the U.S. or India and is the only revenue-based financing company providing two different denominations of loan for the same customer – USD and INR. And by the end of the year, it will extend this to Singapore dollar-denominated loans, better-supporting businesses by uniquely allowing customers to choose where they want the funding. The advantages include less dependence on foreign exchange (forex) and avoiding often strict regulations that govern international money movement.
ECL was founded in 2022 by Das and Arora. And before founding the business, Das spent more than 20 years in the industry as chief risk officer at multiple organizations, including Kabbage (now a part of American Express), in both commercial and consumer finance sectors. Arora worked extensively as a senior leader in B2B SaaS, fintech and regulatory technology spaces, most recently as the general manager, South Asia for PayJoy, a San Francisco-headquartered B2B SaaS fintech.
ECL currently has 25 employees located between the U.S and India. And the company expects to grow to 30-35 employees by the end of year, including plans to hire a CRO/CMO, a head of business development and partnerships and additional engineers.
KEY QUOTES:
“We are doubling down on what we have seen since Day 1 – that the South Asia-U.S. corridor is highly devoid of funding for the simple reason that any cross-border company is never evaluated as a global organization, only as a series of siloed companies in each country. As a result, cross-border companies get the short end of the stick and never get financing up to their potential.”
“ECL is the only revenue-based financing company that evaluates a business’ revenue across every geography to provide a holistic risk assessment, rather than simply looking at one cog in the wheel.”
– ECL co-founder and CEO Kaustav Das
“The fact that VC markets are still so constricted and valuations are still so suppressed is prompting people to look at alternative funding options that they had not explored before, irrespective of how much money they have raised. Historically, revenue-based financing has typically not been as popular in developing countries like India, but in the past two to three years with the reduced availability of VC funding and venture debt markets being challenged, people have started to turn to alternative financing that was not there before.”
– ECL co-founder Manish Arora
“We are excited to co-lead Efficient Capital Labs’ Series A funding round. ECL’s innovative approach to revenue-based financing for cross-border B2B SaaS companies in the South Asia-U.S. corridor is a game-changer. Their ability to evaluate revenue across geographies and provide non-dilutive capital solutions sets them apart. With an exceptional team and deep domain expertise, they achieve best-in-class unit economics for a revenue-based finance business. We are thrilled to support their continued growth and expansion into new markets.”
– Aaron Holiday, co-founder and managing partner at 645 Ventures
“We have been amazed with the unit economics, credit performance and growth that Kaustav and Manish have been able to achieve since our initial investment over a year ago. They have surrounded themselves with a terrific team and we are excited to double-down on our partnership — this round sets the company to explode its TAM and achieve escape velocity.”
– QED Investors Partner and Head of Asia Sandeep Patil
