Why We Invested: Pipe
Not every company is made for venture capital. Raising money from VCs is touted as the best way for a founder to build a big and successful company. It’s almost as if that a $1bn+ outcome is the only way. Fortunately for founders, raising VC is not the only way to build a successful technology business, and for most companies, it is not the best way.
Companies have alternative types of capital they can access depending on the stage, business model, growth trajectory, etc. For SaaS companies, despite the rather predictable cash flows, we found that many of the existing offerings slapped a one-size-fits-all solution to short term cash flow needs, often resulting in overly expensive and cumbersome solutions. And then we met Pipe.
Pipe thinks about these cashflows and contracts as a new investable asset class, enabling businesses with steady monthly cashflow streams to get full contract values upfront. This allows companies to invest in growth without turning to prohibitively expensive debt or highly dilutive equity capital. For investors, they get access to a different type of asset class, one with predictable and recurring revenue streams, like a typical loan but with significantly less the risk of defaulting.
Further, Pipe is built to match the characteristics of SaaS companies. From its core, the platform is designed to understand the financial planning and management needs of these companies, making the process of receiving the capital seamless.
The SaaS industry is a growing space and is expected to continue to grow with the creation of new companies and added business lines. While SaaS companies are beloved by public investors and have been lauded for their IPO success in 2019, the majority of SaaS companies have strong growth, but aren’t necessarily made for VC or public market returns. Pipe is a potential resource for both types of companies, whether their customers are consumers, SMBs, or large enterprises. Pipe creates the ability to tap into different forms of financing, not just for public or high growth companies, but also for those with steady growth but lie outside of these (restrictive) expectations.
At Anthemis, we see this opportunity going beyond just SaaS companies, to any company with predictable revenue streams. Given our investment focus on the fintech space, we see certain insurance companies and policies as a clear market for this type of product. Pipe is a global company by nature; with our footprint across North America, Europe, and the UK, we see tremendous opportunity within the ecosystem we’ve developed.
Finally, the founding team, Harry, Josh, and Zain, impressed us from the start with their knowledge of the space and the vision for where they want to take Pipe. Furthermore, Michal’s addition to the executive team further compounded our belief that the founders were great builders and great recruiters. Michal’s background from LendingClub and Fundbox brings great exceptional experience and insights. We at Anthemis are excited to be supporting the team in their next step as they continue to grow. Onward!
