SaaSBOOMi launches debt fund to support entrepreneurs during the coronavirus2 weeks ago Pronit Das
SaaS entrepreneurs have some relief coming their way to tide them over through this coronavirus pandemic. SaaSBOOMi, a platform to celebrate the growth of the Indian and Asian SaaS communities, has announced a partnership with Indifi, an NBFC that supports small businesses, to help entrepreneurs get working capital financing during the pandemic and pull through the slowing economy.
The SaaSBOOMi community has announced a debt fund for SaaS startups affected by the coronavirus pandemic. This debt fund will be structured as revenue financing, where startups will repay the borrowed funds out of their revenue, on a monthly basis.SaaS startups can apply for this funding line on the SaaSBOOMi website, where an expert group will curate the applications and run it past the NBFC to fund the startup.
The fund has currently partnered with Indifi to collect about INR 40 Cr – INR 50 Cr for the first round of financing, but will be adding more NBFCs partners to increase the fund size as per the demand. The team has claimed to offer a 10-day turnaround time for the fund disbursement, once the company has successfully passed the fund’s vetting process. The companies will have to approximately start repaying the borrowed fund after a year or two, depending on the conditions.
The eligibility parameters for a company to access this fund include a minimum of 24 months operation, with 12 months of recurring revenue proof and at least six months of revenue stability.
To be eligible, startups must have annual recurring revenue (ARR) of over $250,000; they should have been in business for over 24 months, with proof for 12 months of recurring revenue and at least six months of stable revenue.A fixed percentage of the revenue of startups that receive capital through the programme will go into repaying the loan over its tenure. The exact terms of the loan amount, repayment period, and revenue contribution will be based on the negotiations between the startups and the NBFCs.
Apart from the capital, startups participating in the programme will also get mentorship from leading entrepreneurs in India’s SaaS community on where to invest, how to maintain revenue stability, and how to grow sustainably, at least for the next few quarters. Garg said the capital will help startups whether increased churn, which on average has increased from 5% to 30%. “The idea is to help companies ride through this period of uncertainty and survive the next 12-18 months, after which I’m sure the funding and market situation will improve,” he said. According to SaaSBOOMi, only 8% of SaaS companies in the country are venture-backed, making it extremely important for them to get other kinds of financial help to survive in the current crisis. While horizontal SaaS players have seen lesser impact due to Covid-19, vertical players servicing sectors such as aviation, hospitality, and offline retail have been more affected.
However, players in the logistics and supply chain sectors have benefitted from the crisis. Further, the annual revenue rate of the company should be $250K or above. The fund’s investment will not include any equity dilution. However, SaaS companies have been one of the positively impacted sectors in the coronavirus pandemic. Garg told the media that coronavirus has impacted different industries in a different way and so there will definitely be a little bit of impact on SaaS growth in the short term. And when that happens, SaaS companies will need capital to grow their business and continue to serve their customers.
Adding to this, Muthukrishnan said that this platform will also help SaaS founders to access mentorship and guidance to navigate through this unprecedented economic crisis. He noted that most of the SaaS founders are new and haven’t even experienced the Great Depression wherein the condition was relatively better than today’s crisis, so this fund will give them an opportunity to tap into the existing knowledge of the veteran SaaS founders. Earlier, SaaS unicorn Freshworks founder Girish Mathrubootham also noted that this quarter may have a smaller impact on SaaS companies, but next quarter will have a larger impact on the company’s business. He suggested that CEOs need to re-examine the revenue cycles etc and should go into cash-conservation mode. With the pandemic locking people inside their homes, VC funding and investments are also expected to dry up, he added.
WHAT IS THE APPLICATION PROCESS?
Once you submit the form mentioned below, the SaaSBOOMi team will review your application and get back to you if you qualify.
We will then connect you with the Financial Partners, who might require a few more details from your side. This will be a non-dilutive financing
Once you have furnished all the necessary information, expect a quick turnaround from our partners.