It’s a literal pipe dream.
Pipe, a less than two-year-old fintech company, announced a $250 million capital raise yesterday at a $2 billion valuation. Co-CEO Harry Hurst claimed his startup is the fastest fintech to ever reach that valuation.
So what does Pipe do? It helps other startups raise money.
Making SaaS Dreams A Reality
The basic premise of Pipe is simple: allow companies with recurring revenue streams (such as software businesses) to access upfront capital without suffering dilution.
Vetted institutional Investors can acquire the rights to a revenue stream for between a 2% to 8% discount on the full contractual value. Pipe, for its work, takes a cut of the transaction.
The business model is a form of invoice factoring, which is commonly used by manufacturers, but Pipe is pioneering the practice in the world of technology where most capital currently comes in the form of dilutive venture capital money. So far, according to the team, it’s working:
- Hurst said the company provides “the absolute cheapest, most efficient way of financing your company, globally.”
- Earlier this year the company told the Financial Times that no investors had suffered losses.
- And there’s size. Pipe says it’s already processing tens of millions of dollars in contracts per month and has locked in more than $1 billion in commitments from buyers.
With $250 million of new capital in the bag, Pipe plans to double its staff of 34 by the end of the year, become regulated as a broker-dealer, and enter the securitization market.
Important to Note: The Pipe investment was backed by more than a few high profile venture capital firms. One might say they are playing a hand in disrupting themselves.