Trading platform equips SaaS companies to sell subscriptions to investors

By: Robert Freedman.

L.A.-based start-up Pipe says it provides software firms with an alternative to equity and debt by treating annualized customer contracts as tradable assets.

Software-as-a-service (SaaS) companies looking for a quick cash raise can monetize their subscription contracts using a trading platform launched in February by Los Angeles-based start-up Pipe.

Pipe touts its platform as an alternative to equity raises, which force owners to dilute their interests, and loans, which typically come with warrants or covenants that constrain how companies can operate.

“We’re something completely new,” Pipe CEO Harry Hurst told CFO Dive. 

The company launched with a $6 million investment fund and in late June added $60 million to that. 

The company is built around a trading platform that treats the predictable income stream of SaaS companies’ subscriptions as a tradable asset. On the sell side are the company’s annualized customer contracts and on the buy side are investors, including financial institutions and banks, who buy the contracts as assets. 

Source: CFO Dive (2020)

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