Efficient Capital Labs (ECL), a New York-based fintech startup, has raised $7 million in a recent funding round led by QED Investors, with participation from existing investors such as 645 Ventures, The Fund, Lorimer Ventures, Riverside Ventures, and The Generalist. This funding injection will enable ECL to expand its operations and provide innovative financing solutions to B2B SaaS companies operating in the South Asia-U.S. corridor.
Founded in early 2022 by Kaustav Das and Manish Arora, ECL aims to bridge the financing gap for South Asian businesses in the SaaS industry, offering them access to non-dilutive capital. ECL’s unique approach provides B2B SaaS companies a percentage of their annual recurring revenue (ARR) as upfront capital, eliminating the need for third-party investors or marketplace dependence. By funding customers directly from its balance sheet, ECL reduces costs and uncertainties associated with traditional financing models.
Kaustav Das, with extensive experience in risk management and serving as the chief risk officer of organizations like Kabbage, realized the potential of revenue-based financing during his advisory involvement with Capchase. Recognizing the opportunity in India’s rapidly growing SaaS market, Das co-founded ECL to offer cheaper capital to U.S.-based SaaS companies with Indian entities, thereby bridging the cost of capital gap between geographies.
ECL’s revenue-based financing model has already attracted 43 SaaS companies as customers, with over $13 million in loans originated and zero defaults to date. What sets ECL apart is its dual risk assessment in both the United States and South Asia, providing customers with transparency and visibility into the utilization of funds. This level of oversight allows ECL to perform Know Your Customer (KYC) processes in India, further enhancing its offering.
Aaron Holiday, co-founder and managing partner of 645 Ventures, highlighted the potential of the Indian SaaS market and the value proposition offered by ECL’s revenue-based lending model. The steady growth of SaaS startups in India indicates a total addressable market that could reach $10 billion within eight years.
Sandeep Patil, QED Investors partner, emphasized the role of ECL in empowering Indian SaaS companies to drive innovation and global collaboration by providing non-dilutive capital. ECL’s unique advantage lies in its focus on specialist software solutions and the growth of Indian SaaS companies selling to the U.S.
With the latest funding round and a previous $100 million debt facility, ECL has raised a total of $110.5 million. This capital will be utilized to enhance automation capabilities, expand the team across various departments, and improve unit economics.
ECL’s success signifies the demand for alternative financing options in the B2B SaaS sector and underscores the significance of bridging financial gaps across different regions. By providing accessible and cost-effective capital, ECL paves the way for border-agnostic access to funding, fostering entrepreneurship and growth in emerging markets.
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