RBF works well mainly for SaaS (Software as a Service) companies which work on a subscription basis and require the client to pay monthly, quarterly or annually.
KredX, India’s leading integrated cash flow solutions platform, today announced that they will disburse 1000cr in this fiscal through Revenue based Financing (RBF) product focused on consumer brands and SaaS companies through its network of lenders. In the last 2 years, KredX’s Revenue Based Financing product has been popular amongst brands with e-commerce presence across platforms like Flipkart, Amazon and Myntra. It has also financed a multitude of SaaS companies across sectors in the past.
“RBF is a cash-flow linked, zero collateral, debt capital for growing businesses which have some visibility on their revenue in the foreseeable future. It works by pledging a portion of your future revenues in exchange of upfront capital.” said Anurag Jain, Founder, KredX.
Availability for competitively priced cloud based tech infrastructure has resulted in the proliferation of a large number of SaaS based companies globally and in India. As per reports, Indian SaaS market is expected to grow by 6x to 13-14 billion USD by 2025. To ride the new wave of demand, most SaaS firms are looking at additional funds to augment their capacity, reach and invest in manpower to scale up their operations.
RBF works well mainly for SaaS (Software as a Service) companies which work on a subscription basis and require the client to pay monthly, quarterly or annually. However, to build a strong pipeline of projects, any SaaS firm needs to invest in capacity building, increasing the team strength, expertise, office space etc. RBF plays an important role in helping firms access capital based on their future income.
“We have helped tech companies alter their cash flow routing to be eligible for RBF allowing them to access growth capital in less than a fortnight” said Jain.
The lenders inject a certain amount of funding into the business, and in exchange, they get a percentage of the gross revenues for an agreed period of time. Normally, EMIs linked to monthly revenue go on until the initial funding amount is fully repaid, plus a multiple agreed on by both parties.
“Indian SaaS firms are today competing with the global players. However, flexibility of working capital and easy availability can play an important role in the growth of a firm. At KredX we understand the nuances of the revenue streams of SaaS firms and provide flexibility of structuring credit according to individual firms rather than a cookie cutter model.” said Jain.
KredX was launched in 2015 by IIT Kanpur engineers – Manish Kumar and Anurag Jain to help SMEs meet their short term working capital requirements by funding them based on their invoices and receivables. Till date it has processed more than 800,000 invoices, helping more than 23,000 suppliers through 30,000+ investors according to the latest numbers shared by the company.
The Bengaluru based company had raised $26 million in Series-B funding in second half of 2019 from Tiger Global Management and its existing investors including Sequoia Capital & Prime Venture Partners.
Source: Business World
