DH Capital and SaaS Capital have launched a fund to provide debt financing to growing software as a service (SaaS) providers, the companies said Monday. The new fund will provide senior debt loan facilities to SaaS companies with more than $3 million in revenue.
DH Capital is an investment banking firm focused on the Internet infrastructure, hosting and telecommunications sectors. SaaS Capital offers credit facilities based on future revenues, so the total amount of available capital increases as the business grows.
The SaaS Capital fund is designed for SaaS firms who have passed the start-up stage, but require additional capital to support continued growth by borrowing against future cash flow streams. The credit facility can be used to either replace or supplement venture capital financing.
"It's an exciting time to be launching this new fund," said 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."
"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," said Peter Hopper, CEO of DH Capital.
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 syndication partners.