SaaS Capital Closes Second Fund
SaaS Capital closed its second fund with $58 million in limited partner commitments. SaaS Capital’s first fund, which closed in May 2012, had $22.5 million in LP commitments, and provided facilities to 14 SaaS companies.
SaaS companies use SaaS Capital as an alternative to a round of equity or traditional senior debt. The uniquely structured facilities provide more capital and over a longer duration than any other lender. This structure allows founders and early investors to retain more ownership and control of the business while still financing significant long-term investments in sales, marketing, and new product development. SaaS Capital’s line of credit facilities — ranging in size from $2 million to $10 million — allow SaaS companies to draw down funds as needed over two to three years, and repay it over an additional three to five years.
SaaS Capital launched both Fund I and Fund II in partnership with DH Capital, a New York-based investment bank focused on Software-as-a-Service and data infrastructure companies. Through its partnership with DH Capital, SaaS Capital can also assist SaaS businesses with a variety of M&A and capital raising advisory services.
“The $58 million, when paired with our bank line, will give us the capacity to fund $75 to $100 million into approximately 25 new SaaS portfolio companies” said Todd Gardner, founder and managing director of SaaS Capital. “The larger scale allows us to better serve the West Coast by bringing on a managing director in Seattle, and also assist bigger, more established SaaS companies with larger investments, up to $10M.”
“DH was an instrumental partner in raising the new Fund,” Gardner said. “Additionally, the firm continues to provide important ongoing support by assisting our portfolio companies with acquisition, exit or follow-on private equity transactions as needs arise.”
SaaS companies all over the US and UK, as small as $2 million in annual revenue and as large as $40 million, have used SaaS Capital to fund their growth. And despite being less than three years old, Fund I has already realized a half-dozen successful exits. Companies such as Liquid Planner, which used the debt to grow into an $8 million Series B raise, as well as Clinicient and CoverMyMeds, which skipped a venture round altogether and recently raised private equity from Catalyst Investors and Francisco Partners, respectively, have all been better positioned to realize greater value for their founders and existing equity holders by working with SaaS Capital.