Recurring Revenue Securitization Problem: Financing options for startups are extremely limited: either equity or debt. Founders must give up ownership in their company or take money from banks at non-zero interest rates.
Solution: There’s been a lot of buzz online recently about alternative forms of financing for startups or SaaS companies with reliable, recurring revenues. The current model is something along the line of what Pipe has done by creating a “financing platform that provides non-dilutive financing to SaaS companies in the form of an instant cash advance. The concept is best described by Alex Danco in his blog post “Debt is Coming” and was additionally expounded upon by Patrick McKenzie from Stripe in his Tweetstorm on SaaS-cash flow backed securities. Essentially the idea is to give companies money today for the reliable MRR cash flows that will eventually return in the future. The benefit of such agreements are that companies no longer have to discount annual memberships and can retain equity in their companies.
The business would compete directly with Pipe (right now the only major player in the market) and innovate on the recurring revenue securitization model. Perhaps, the business would allow anyone to invest in these securities.
