Podcast: How SaaS Companies Can Qualify for Non-dilutive, Revenue-based Funding

The Capchase Team
The Capchase Team
Posted on
January 17, 2023
min read
Podcast: How SaaS Companies Can Qualify for Non-dilutive, Revenue-based Funding

Our Co-Founder and CEO, Miguel Fernández, sat down with Melissa Kwan, the host of the eWebinar ProfitLed podcast, to discuss how Capchase was founded and how we’re currently scaling, the pros and cons of VC funding, and which companies should consider funding through non-dilutive, revenue-based capital. 

You can listen to the entire conversation below or on the ProfitLed podcast, but here are just a few key takeaways:

Your education doesn’t dictate your destiny

Miguel has a degree in mechanical engineering and a masters in energy engineering, specializing in nuclear energy. Despite this, he’s never worked an engineering job. After he graduated he went into consulting and eventually sales for a SaaS company. It was at that company that he discovered one of the biggest hurdles facing SaaS startups: that they have to offer deep discounts to customers because they need to be paid upfront in order to cover the steep costs of customer acquisition and implementation. Miguel wanted to help startups close more deals by offering flexible payment terms so they could realize revenue faster and require less funding—that’s how Capchase was born.

Venture capital funding isn’t for everyone

VC funding can provide significant capital for startups, which can be a blessing or a curse. If a startup already has a solid product that’s beginning to gain traction, large amounts of funding can be used to create massive go-to-market pushes that can provide faster feedback loops for improvement. Miguel cites this as a core reason Capchase pursued VC funding. 

On the other hand, VCs often expect the startups they invest in to shoot for the moon: to take large risks that play out well if a company succeeds, but can be a waste of time and energy for those that don’t. 

Over the years, securing VC funding has also become a mark of the success of a company. But, as Miguel highlights, there is a difference between funding success and commercial success. He notes that founders should consider whether full ownership and control over their company is more important than being VC-backed. 

Scaling is always a challenge

Having grown Capchase from five to 100 employees in two years, Miguel outlines that growth is rarely linear—it’s a constant process of learning and unlearning, building and deconstructing to create better processes and more organization. The most effective solutions he’s seen to overcome growing pains are hiring a great leadership team who are true experts in their given divisions, favoring overhauling and innovation over incremental changes, and giving people full ownership of their work to ensure seamless execution. 

Accessing non-dilutive funding has very few restrictions

For SaaS companies, there are very few requirements to qualify for revenue-based financing—including securing funding through Capchase. However, those with more revenue and a history of strong growth will qualify for more funding over others. Miguel also cautions that since companies will need to return their non-dilutive funding, those who have a strong grasp on their unit economics are better positioned. 

In his experience through Capchase, Miguel has seen that bootstrapped founders tend to be better at managing their cash and will use it to fund every part of their business. VC-backed companies, on the other hand, are not as practiced at managing cash but are very good at allocating large amounts of their funding into very specific initiatives. Overall, Miguel recommends that all companies take smaller, more frequent withdrawals of their funding over larger withdrawals every so often.

To learn what revenue-based funding you could unlock with Capchase, get in touch with our team.