A startup based in New York called Efficient Capital Labs (ECL) offers financing options for B2B SaaS businesses operating along the South Asia-US trade route. To support its expansion, the company just raised $7 million in finance led by QED Investors. ECL provides its clients with 100% non-dilutive revenue-based financing. ECL provides access to money at a considerably lower cost and eliminates the volatility associated with relying on third-party investors or market dynamics to get capital in exchange for revenue by funding customers through its balance sheet.
Early in 2022, Kaustav Das and Manish Arora established Efficient Capital Labs. Das worked for American Express for nearly 15 years as the non-card business lending division’s top credit officer. Additionally, he worked for Kabbage, Petal, and Quadpay as their chief risk officer. Das’s venture into revenue-based finance began in June 2020 when Capchase’s CEO and co-founder Miguel Fernandez asked him to be an advisor to the business. Das never officially joined Capchase as an advisor, but he was put in touch with Indian businesses looking for funding.
In September and October of 2021, Das traveled to India and discovered the “opportunity was massive.” SaaS is expanding by 6x to 7x, according to Das, but financing is still quite expensive, despite being more readily available in India. And I discovered that although the majority of SaaS companies had U.S. entities and bank accounts, they were unable to access the more affordable finance available there. To bridge the cost of capital gap between geographies, it became the most significant pillar of what we are constructing with Efficient Capital.
ECL was able to hire staff and expand his product after his company secured a $3.5 million funding round from 645 Ventures. Along with closing on a $15 million debt facility in November of last year, he also updated it in June to a $100 million special purpose entity. The Fund, Lorimer Ventures, Riverside Ventures, and Generalist are among additional institutional supporters.
According to Aaron Holiday, co-founder and managing Partner of 645 Ventures, given the “steady growth” of SaaS Fstartup formation and growth in India, his firm saw an opportunity for the total addressable market to reach $10 billion within 8 years.
Sandeep Patil, who heads the firm’s Asian investments at QED Investors, said, “Indian SaaS companies are known for innovative and specialist software solutions, and their growth in selling to the U.S. represents a new era of entrepreneurship and global collaboration. By providing non-dilutive capital to these companies, ECL empowers the founders to build for the long term and drive innovation and growth.”
Efficient Capital is a revenue-based financing company that focuses on South Asia and Southeast Asia, currently focused on US-India and US-Singapore. The U.S. component is important. There’s always going to be a dollar-denominated loan to a U.S. entity and a U.S. bank account.
The company offers upfront funding that is completely non-dilutive in nature equal to a portion of the annual recurring revenue (ARR) of B2B SaaS enterprises. ECL concentrates on pre-seed, seed, and Series A firms, and it charges a fixed fee that ranges from 9% to 12% of the cash it contributes up front. The majority of its loans have 12-month maturities. Anything higher gets risky because a longer time horizon makes it more difficult to predict.
Efficient Capital Labs counts 43 SaaS companies as customers and has originated more than $13 million in loans with zero defaults, according to Das. The company is only a year old but is already making a name for itself in the industry. Efficient Capital Labs is revolutionizing financing for SaaS companies in South Asia-US corridor.
Efficient Capital Labs is a company that is making waves in the financing industry. It is providing a much-needed service to B2B SaaS companies operating in the South Asia-US corridor. The company offers revenue-based financing that is 100% non-dilutive in nature, making it an attractive option for startups. With dual risk assessment in both geographies, Efficient Capital Labs provides transparency to its customers, which is crucial in building trust. As the SaaS industry continues to grow
First reported by TechCrunch.
