DH Capital has unveiled a new fund in partnership with debt finance provider SaaS Capital. The fund will provide growth capital to emerging software-as-a-service businesses. It will also provide senior debt loan facilities to SaaS companies with more than $3 million in revenue.
DH Capital announces a new fund in partnership with SaaS Capital. SaaS Capital, the pioneer provider of debt financing for SaaS businesses, today announced the launch of a new fund designed to provide growth capital to emerging software-as-a-service businesses. Building on the success of its first fund, SaaS Capital will provide senior debt loan facilities to SaaS companies with more than $3 million in revenue. DH Capital is a leading boutique investment banking firm with deep industry expertise in Internet infrastructure, telecommunications, and SaaS.
Value creation in SaaS businesses is based on growth, and growth requires capital. The SaaS Capital line of credit product is specifically designed to meet the needs of SaaS firms who have passed the start-up stage, but require additional capital to support continued growth. By borrowing against future cash flow streams, businesses can essentially self-fund their current growth activities. A SaaS Capital credit facility can be used in conjunction with, or sometimes as replacement for, venture capital financing.
Credit availability is determined by either an advance rate against booked but unbilled contract value, or a multiple of monthly recurring revenue. Loan amounts range from $1 million to $4 million with larger facilities available through our syndication partners. SaaS Capital’s unique approach to growth capital offers several advantages. First, since the credit facility is based on future revenues, the total amount of available capital increases as the business grows, effectively providing negative amortization. Second, a company can elect to draw down capital only when it’s needed and thereby reduce its overall borrowing cost. Third, a SaaS Capital line typically provides access to significantly more capital than a bank facility.
“It’s an exciting time to be launching this new fund,” comments Todd Gardner, CEO of SaaS Capital. “Prospects for SaaS businesses have never been brighter, but the availability of capital has not kept pace. Even as the business model has flourished and weathered a recession, SaaS remains undervalued and underserved. We are pleased to offer this additional funding alternative to support businesses seeking to fund their own growth.”
Peter Hopper, CEO of DH Capital agrees the SaaS market remains underserved. “We have seen similar service trends on the investment banking side, and so we are excited to partner with the SaaS Capital team to help support SaaS companies with both capital and investment banking services. ”
Sean Noonan, CFO of Clickability, and a former SaaS Capital customer commented further, “Our SaaS Capital line-of-credit was clearly superior to traditional bank debt, additional venture capital, or a venture debt term loan. We would be happy to be a customer again and it’s great to see this new fund available in the market for other companies like ours.”
About DH Capital, LLC
DH Capital is a private investment banking partnership serving companies in Internet infrastructure, communications, and SaaS. Headquartered in New York City with offices in Boulder, Colorado, the firm’s principals have extensive experience and proven abilities in capital formation, finance, research, business development and operations. DH Capital provides a full range of advisory services to companies and financial institutions, including mergers and acquisitions, private capital placements, financial restructuring, and operational consulting. DH Capital has completed over 90 M&A transactions and private capital placements totaling more than $4 billion in value.
About SaaS Capital
Founded in 2006, SaaS Capital is the pioneer provider of debt-based growth capital for SaaS companies. By leveraging the predictable revenue streams and future contract values of the SaaS model, SaaS Capital’s debt facilities allow SaaS companies to accelerate future cash-flow streams to fund operations today. SaaS Capital’s products provide more availability than traditional accounts receivable financing, and are structured with flexible terms to meet the needs of SaaS businesses.