Capchase and the Evolution of Enterprise Lending
We’re excited to announce our investment in Capchase as part of their Series B financing. Our firm has been fortunate to work with many of the pioneers in fintech, and we are excited to partner with Miguel, Przemek, and the entire team at Capchase in the emerging category of revenue-based financing for recurring-revenue businesses.
Our experience in working with other leaders within fintech such as LendingClub, Kabbage, and SoFi has been that they combine several key features that collectively revolutionize the customer experience. Key aspects of this include: (i) a greatly simplified customer experience, (ii) a shift to digital underwriting and a real-time understanding of credit risk, and (iii) greater insights into how to better serve borrowers over time, whether that be through data-driven insights or new products. Capchase similarly pulls these elements together, but this time with a focus on helping fast-moving recurring-revenue companies further accelerate their growth.
We were struck as we interviewed Capchase customers by the elegance of their customer experience. As any startup CEO knows, the process of getting a loan from a bank or venture lender can take several months. The back-and-forth discussions with lenders often involves coordinating meetings, management presentations, and collecting and organizing various types of reports. If successful, this leads to a term sheet from a potential lender that also comes with its own unique set of features and further negotiation. Capchase saw the opportunity to greatly simplify this process by offering an API-driven approach to data collection and decision-making. Borrowers can provision access to the systems they use (such as their bank accounts, accounting systems, and payment rails) and Capchase can pull the data they need from these systems to send back a financing offer in a matter of days.
The use of data and real-time APIs to underwrite credit also means that Capchase can shift their focus from gathering data to developing insights. Traditional lenders and investors ask companies to send their quarterly financials after they have been published. Capchase shifts this paradigm to a real-time data connection to the systems that companies use for their payments and banking. This automation enables them to shift their focus to the first order question of what is happening with the business to the second order question of understanding why something is happening. Our experience in working with companies such as Kabbage (a small business loan provider) has been that this enables lenders to develop a data-driven approach to enterprise insights that can, over time, help customers understand their own businesses better.
In getting to know Miguel, Przemek, and the entire team at Capchase, we have been impressed by both the speed with which Capchase has executed against this opportunity — the company is less than two years old — and the specialization that their focus on the recurring-revenue segment of the market has enabled. We believe that Capchase will grow and lead this market in the same way that the other firms that we have worked with have led their respective markets, and are excited to be joining the team in their journey.
