Financing Platform Pipe Secures $6 Million

By Amit Chowdhry ● Mar 2, 2020
  • Pipe, a new financing platform for SaaS companies, announced it raised $6 million in a seed round of funding led by Craft Ventures

Pipe — a new financing platform for SaaS companies — announced that it raised $6 million in a seed round of funding led by Craft Ventures with participation from Fika Ventures, MaC Ventures, Naval Ravikant, WorkLife Ventures, Liquid2, and The Weekend Fund.

And Pipe — which is led by serial entrepreneurs Harry Hurst, Josh Mangel, and Zain Allarakhia — is known for offering non-dilutive financing to SaaS companies through an instant cash advance against the full annual value of software subscriptions. Plus Pipe helps turn monthly recurring revenue (MRR) into annual recurring revenue (ARR).

Built for SaaS companies that can benefit from immediate payment, Pipe enables companies to grow without additional costs to their customers and without diluting their current cap table.

Pipe is known for addressing a $250 billion worldwide cloud services market — which is growing 17.5% year-over-year. And by advancing capital against their recurring revenues, Pipe removes a major growth obstacle for many SaaS companies.

How does it work? Pipe’s platform assesses customers’ key metrics by integrating with its accounting, billing, and subscription management systems. Then it makes an instant decision on whether the company qualifies for a PipeLine of finance. The facilities range from $10,000 per month to several million dollars per month for later-stage companies.

Key Quotes:

“Until now, the main financing option for SaaS companies has been dilutive equity rounds. Pipe is the tool every SaaS founder has been waiting for. It allows SaaS companies to grow without dilution by financing their SaaS receivables.”

– David O. Sacks, Co-Founder & General Partner at Craft Ventures

“SaaS companies have wonderfully predictable recurring revenues that, assuming negative churn, last forever. The problem is that their customers want to pay for their subscriptions monthly or quarterly. Founders of high growth startups find themselves discounting revenues by as much as 40% to entice customers to prepay annually, and at the same time raise dilutive equity capital to bridge the gap between the cash flows.”

“Pipe is creating a new asset class for investors: a fixed income-like product to yield attractive returns from asset-backed, predictable, recurring revenue streams.”

– Pipe co-founder and co-CEO Harry Hurst

“Pitch customers, not investors, and let Pipe convert subscriptions into instant, dilution-free financing.”

– AngelList CEO & Pipe investor Naval Ravikant giving advice to SaaS companies

“Having efficient cash flow is mission critical for us to scale. We often risked losing deals by requiring annual upfront payments when customers wanted to pay monthly. Pipe solves this for us and allows us to invest more heavily into our growth. It may easily save us a fundraise.”

– Fountain CEO Keith Ryu

“Having overseen thousands of sales and contracting processes during my career, I instantly saw the value in Pipe’s elegant solution to the payment term vs. cash flow problem that so many companies face.”

Okta general counsel Jon Runyan