SaaS Capital, an investment firm that specializes in providing debt financing to companies that create software-as-a-service products, has raised $58 million and expanded its footprint in the Pacific Northwest with the hiring of Rob Belcher as managing director.
It marks the second fund for SaaS Capital, which raised its first independent fund in 2012 to the tune of $22.5 million.
“The $58 million, when paired with our bank line, will give us the capacity to fund $75 to $100 million into approximately 25 new SaaS portfolio companies,” said SaaS Capital founder and managing director Todd Gardner. “The larger scale allows us to better serve the West Coast by bringing on a Managing Director in Seattle, and also assist bigger, more established SaaS companies with larger investments, up to $10 million.”
Belcher is no stranger to the type of debt-based financing practiced by SaaS Capital, since he previously worked at Lighter Capital, a Seattle firm that takes a similar investment approach. Based in Cincinnati, Ohio, Belcher said that SaaS Capital already has a strong existing presence on the East Coast, in part through a partnership with DH Capital in New York.
“With Fund II we wanted to expand geographically to better serve the tech centers of the West Coast,” he said. “Seattle has a tremendous tech industry supported by numerous name brand VCs and active angels. Obviously there are other West Coast cities that feature a strong tech industry. But a larger proportion of companies in the Pacific Northwest tend to be B2B and more equity efficient than in the Bay Area.”
It also didn’t hurt that SaaS Capital has already met with success in the Northwest, providing capital to Seattle-based LiquidPlanner and Portland-based Clinicient.
LiquidPlanner CEO Liz Pearce described her decision to take on debt financing in this 2013 GeekWire guest post, writing that it allowed the company to raise capital without dilution while staying “100% focused on running our business.”
Belcher said that he’ll be actively scouring the Pacific Northwest landscape for SaaS-based businesses that need growth financing, but don’t necessarily want to sell equity. He said they typically get interested in SaaS companies that have a minimum of $250,000 in monthly recurring revenue, and want between $2 million and $10 million.
“They may be looking to push off a Series A, B or C (financing) until they’ve reached some additional milestones, resulting in a significantly increased valuation,” said Belcher. “Or, they may never do that equity round, instead choosing to grow and sell for $30 million to $100 million without the dilution of that additional round.”