Start-up Corner: Solving the Challenge of Funding Growth of the SaaS Economy

Miguel Fernandez, Contributor
Przemek Gotfryd, Contributor

Miguel Fernandez and Przemek Gotfryd (MBAs ’21) share how their startup, Capchase, helps SaaS companies avoid painful dilution and extend their runway.

Tell us more about your background and what inspired you to be an entrepreneur. 

Miguel Fernandez (MBA ’21): I am originally from Madrid, Spain. Even though I have an engineering background (industrial and mechanical in Madrid, and Energy–Nuclear and Renewables in Munich), I went straight into consulting after school. During my roughly two years in consulting, I launched two marketplaces: a peer-to-peer renting of sports equipment and a direct-to-consumer aggregator that delivered within two hours in Madrid. After tasting the thrills of starting from scratch, I knew I wanted to work in tech from then on. I quit consulting and joined an early-stage Software-as-a-Service (SaaS) company, Geoblink, as the first person in sales. I then built the sales and customer success team and ultimately led the UK office. During those three years, I experienced most of the pain around cash management and payment terms that we are solving right now.

Przemek Gotfryd (MBA ’21): I grew up in post-communist Poland—though equipped with a Pentium computer since the mid-1990s—and at age 17, I came to the UK on a scholarship. Following my degree in economics and my first job as a strategy consultant, I was fascinated by tech and joined TCV as a growth equity investor. There I covered and invested in consumer, data, and B2B SaaS companies. Sitting on the other side of the table from a lot of amazing entrepreneurs and listening to their inspiring stories, I developed the desire to become an operator and to help get a business off the ground. Capchase is this business.

What is the problem that you are trying to solve?

We recognized that SaaS companies (including the most successful ones) make a lot of difficult choices around how to fund the growth of their businesses. While they are able to sign up a lot of customers and grow their bookings rapidly, cash in the bank always lags by up to 12 months. SaaS companies are forced to resort to expensive or inconvenient ways of funding growth by selling equity, raising traditional venture debt or giving steep discounts to their customers to get paid upfront. In our opinion, SaaS founders should be spending 100% of their time on building and selling amazing products, not figuring out how to fund growth.

What is your solution?

Capchase unlocks cash tied up in monthly and quarterly-paid contracts. We effectively bring to the present up to 12 future payments by license buyers so a SaaS company can receive it on day one, reinvest into growth, and very often dramatically extend the runway until they need to raise VC money again (if at all). We made the process very seamless. SaaS companies can connect their banking, accounting, and billing system with a few clicks; we get back to them with our funding decision within a day, and we advance funds within a few days. And we are able to scale with the company as it grows, so founders do not need to renegotiate the venture debt line they would have taken out otherwise, ideally avoiding further dilution.

What was the inspiration behind your company/idea?

Fernandez: I used to run a sales and customer success team at an early-stage SaaS company in Spain. In every deal, we felt the pain of offering deep annual discounts to our customers in order to get the money upfront. It complicated the sales process, lengthened the sales cycle, and effectively cut our monthly recurring revenue (MRR). On the other hand, selling equity was expensive, and raising venture debt was slow and resulted in a lot of covenants. I knew there had to be a better way.

Gotfryd: As a growth investor, I used to speak to dozens of Series A through Series C SaaS companies every month. One issue came up time and time again: despite bringing to market critical products and having great sales teams, founders struggled to align bookings with cash, despite signing dozens of—often multi-year—contracts. It did not make sense. 

Who is the team behind your startup?

Miguel (old Section I) brings strong experience in sales, and he previously headed a country for Geoblink, an early-stage SaaS company based in Madrid. Przemek (old Section C) brings finance and investing experience. The other two co-founders, Luis and Ignacio, are former Geoblink colleagues and good friends of Miguel and joined to head product and tech efforts. We also have a strong team of more than ten developers and data scientists based in Europe (Madrid and beyond) and a senior head of capital markets. We are actively hiring and looking for a growth marketer and a head of finance.

How did you get started?

We went through an ideation phase in early 2020 and started putting everything in place as RC classes wound down. The good thing is we are also roommates, which helped a lot in initial brainstorming sessions, often late at night. Being present on one camera screen during our seed fundraising over the summer, we were often the only duo investors had seen together in one room in a long time. It all started remotely, and we will probably continue building a remote-first business going forward. 

What’s next?

We received lots of customer interest following our seed round announcement in late August. This showed that there was a lot of demand for our product from very strong businesses. We are laser-focused on building Capchase as a product-first company and plan to not only provide SaaS companies with financing but also become their preferred “partners in growth.” In parallel, we are raising a big credit facility in order to support as many amazing founders as possible on their growth journeys. We look to work with growing software companies with at least $500K in annual recurring revenue (ARR), so please send your SaaS friends our way!

Miguel Fernandez (MBA ’21) came to HBS after working at Geoblink wearing every single hat in the sales team. Before that, he worked at Monitor Deloitte for two years and launched two marketplace companies, Wibbou and Heydey. Originally from Madrid, he has also lived in Munich and London.

Przemek Gotfryd (MBA ’21) came to HBS after spending three years working as a growth tech investor at TCV in London, covering consumer and B2B data and SaaS companies, and three years as a strategy consultant at OC&C. He grew up in Poland and studied economics at LSE and Sciences-Po.