Home japan financial crisis This Hot Pipe-ing Startup Just Raised $ 50 Million To Be The “Nasdaq For Revenue” – TechCrunch

This Hot Pipe-ing Startup Just Raised $ 50 Million To Be The “Nasdaq For Revenue” – TechCrunch

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A little over a year ago Pipe raised a $ 6 million fundraising fund led by Craft Ventures to help them continue their mission of providing SaaS businesses with a financing alternative outside of equity or venture capital debt.

The goal of the buzzy startup with the money was to give SaaS companies a way to get their income by pairing them with investors in a market that pays a reduced rate for the annual value of those contracts. (Pipe describes its buy-side participants as “a controlled group of financial institutions and banks.”)

A few months after this first fundraiser, Pipe provided additional funding of $ 10 million as an extension of this cycle.

And now, today, Miami-based Pipe announces a further increase of $ 50 million in “strategic equity financing” from a multitude of top investors. Siemens Next47 and Jim Pallotta’s Raptor Group co-led the round, which also included participation from Shopify, Slack, HubSpot, Okta, Chamath Palihapitiya from Social Capital, Marc Benioff, MSD Capital from Michael Dell, Republic, Seven Seven Six by Alexis Ohanian and Joe Lonsdale.

While the bulk of the round is spent buying primary stocks, a minority of the round is spent buying secondary stocks (meaning that a small portion of the dollars raised was used to buy stocks. existing shareholders, such as employees and officers).

Pipe co-CEO and co-founder Harry Hurst is reluctant to label the latest raise with a scene.

“We don’t want to play the alphabet game,” he said. “It wasn’t about the money. We had five or six years of track before this round. It was about getting the right partners on our capitalization table. “

Along with the new funding, Pipe said it is also expanding the reach of its platform beyond strictly SaaS companies to “any business with a recurring revenue stream.” This could include D2C subscription companies, ISPs, streaming services, or telecommunications companies. Even the administration and management of venture capital funds is routed through its platform, for example, according to Hurst.

“When we first went into the market, we were very focused on SaaS, our first vertical,” he said. “Since then, more than 3,000 companies have registered to use our platform. These companies range from early stage and seeded companies with sales of $ 200,000 to publicly traded companies.

Pipe’s platform assesses a customer’s key metrics by integrating with their accounting, payment processing and banking systems. It then instantly assesses the performance of the business and qualifies them for a trading limit. Trading limits currently range from $ 50,000 for small early stage and early stage companies to over $ 100 million for early stage and publicly traded companies, although there is no cap on the size of a trading limit.

“The best way to sum it up is that we can work with any business that has a high degree of predictability of its income,” said Hurst. Pipe, he added, aims to turn that monthly recurring income into annual recurring income.

In the first quarter of 2021, tens of millions of dollars were traded on the Pipe platform. Between its launch in late June 2020 and the end of the year, the company has also seen “tens of millions” of transactions taking place through its marketplace. The ARR tradable on the platform currently exceeds $ 1 billion.

“We help businesses grow on their own terms,” said Hurst. “Or, you could say that we are building the Nasdaq to generate income. Virtually every business in the world already has a recurring revenue model, or if it doesn’t, they are thinking about how they can adapt to it.

Image credits: Pipe

Pipe is also using its new capital and new partnerships to bring its platform to the global stage.

The startup was officially launched in the United States, but is enjoying success in Europe, Asia-Pacific, Latin America and Canada. In the long term, Hurst expects India to be one of its biggest markets.

“When we talk about global expansion, we are talking about multi-currency support,” Hurst said. “And, teams on the ground in local markets. Technically, we’ve served a global audience from day one.

A little background

Hurst, Josh Mangel and Zain Allarakhia founded Pipe in September 2019.

The goal of the platform is to provide businesses with recurring income streams access to capital so that they don’t dilute their ownership by accepting external capital or forcing them to take out loans.

Pipe, in essence, is a trading platform for a new asset class: recurring income.

But Hurst is also quick to say that the 25-person company doesn’t see its solution as an alternative to equity in all cases.

“We believe there is a very important time and place for fairness,” he said. “The fundamental problem with fairness is that the sale becomes more valuable over time as you grow.”

Pipe, he said, has no cost of capital. Institutional investors compete with each other for transactions on its platform. In return, Pipe charges both parties on either side of the trade a fixed trading fee of up to 1%, depending on the volume.

Its objective with the last cycle is to partner with its investors “to provide access to growth capital to the millions of customers they collectively serve”.

“They create tools on the product side and we provide access to capital markets, and especially in the case of start-ups that would otherwise not have access to capital, we are trying to level the playing field,” said Hurst.

Its investors all share a similar sentiment: they like the way Pipe offers companies an alternative to traditional financing mechanisms.

Monty Gray, SVP Corporate Development at Okta, believes that Pipe’s platform “simplifies the tedious process of traditional fundraising, allowing founders to focus on growing their core product.”

“We are excited to see how Pipe can help not only the startups in the Okta Ventures portfolio approach funding, but also Okta’s large customer base,” he said.

For the founder and CEO of Social Capital, Palihapitiya, Pipe is leveling the playing field for companies in the capital markets.

“By taking the underlying contracts that generate recurring income and making them tradable for the first time, Pipe unlocked multibillion dollar assets class, income, ”he said.

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