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May 02, 2012

Capital Growth Fund for SaaS Firms Unveiled



Emerging Software-as-a-Service (SaaS (News - Alert)) businesses will now have access to a growth capital funding, thanks to DH Capital in partnership with SaaS Capital. The new capital funding will also provide SaaS companies that have more than $3 million revenue a senior debt loan facility.

SaaS is a debt finance provider that has seen success in debt financing and by partnering with a leading boutique investment banking firm like DH Capital that has deep expertise in SaaS, telecommunications and Internet infrastructure, it hopes its credit product will be attractive to SaaS firms.

 SaaS firms that have passed the initial startup stage usually require additional capital to support their continued growth. A SaaS Capital credit facility that DH Capital and SaaS Capital is offering will essentially help these businesses self-fund their growth activities by borrowing against future cash flow streams. When SaaS businesses experience growth this, in turn, results in value creation that accelerates further growth.

SaaS Capital credit facility will offer credit based on future revenues which means that a businesses’ total capital increases as its business grows. Credit will be offered either as an advance rate against the unbilled contract value or as a multiple of a business’ monthly recurring revenue which will range from $1 million to $4 million for larger facilities.

SaaS Capital facilities will allow businesses to access significantly more capital compared to what a bank facility would be willing to offer. In addition, companies will be free to only draw down capital when needed thereby reducing the borrowing cost. According to the CEO of SaaS Capital, Todd Gardner, SaaS businesses have very high prospects and the new fund will help support businesses seeking to grow. He also said that the new fund fits well with the business model of SaaS companies, most of which have been undervalued and undeserved.

The DH Capital CEO, Peter Hopper, also said that his company is excited to offer capital and investment banking services to SaaS companies which are superior to traditional bank debt or venture debt term loan. DH Capital offers advisory services to financial institutions and companies and has proven extensive experience in business development and capital formation.




Edited by Amanda Ciccatelli
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