QED Investors and 645 Ventures co-lead latest round

NEW YORK--(BUSINESS WIRE)--Aug. 21, 2024-- Efficient Capital Labs (ECL), the leading revenue-based financing provider that provides non-dilutive capital to B2B SaaS companies operating in the South Asia-U.S. corridor, today announced an $11 million Series A fundraise co-led by QED Investors and 645 Ventures. The round included participation from existing investors Riverside and Generalist. New investors FJ Labs and Eudemian Ventures also participated in the funding.

The funding will be used to expand into Singapore and other Southeast Asia markets, building on the successful traction seen in the U.S. and India where ECL has originated more than $70 million in financing and tripled to serve over 100 companies over 12 months from Q1 2023 to Q2 2024.

“We are doubling down on what we have seen since Day 1 – that the South Asia-U.S. corridor is highly devoid of funding for the simple reason that any cross-border company is never evaluated as a global organization, only as a series of siloed companies in each country,” ECL co-founder and CEO Kaustav Das said. “As a result, cross-border companies get the short end of the stick and never get financing up to their potential.”

Today, a global B2B SaaS company may have $2 million of revenue coming in from the U.S., another $2 million of revenue from India and $1 million of revenue from Singapore. Historically, a revenue-based financing company based in the U.S. would only evaluate this business as a $2 million company because they have zero visibility on what is happening outside the country.

“The way their infrastructure, risk strategies and APIs are built is local,” Das said. “ECL is the only revenue-based financing company that evaluates a business’ revenue across every geography to provide a holistic risk assessment, rather than simply looking at one cog in the wheel.”

ECL increased its accounts receivable outstanding sixfold from 2022 to 2023. In the first six months of 2024, the company has already doubled that number again, in part because of default rates way below industry standards and a 70 percent repeat rate of customers taking additional financings.

ECL currently lends to cross-border companies that have at least one entity in the U.S. or India and is the only revenue-based financing company that provides two different denominations of loan for the same customer – USD and INR. By the end of 2024, it will extend this to Singapore dollar-denominated loans, better supporting businesses by uniquely allowing the customer to choose where they want the funding. The advantages include less reliance on foreign exchange (forex) – exchanging one currency for another – and avoiding often strict regulations that govern international money movement.

“The fact that VC markets are still so constricted and valuations are still so suppressed is prompting people to look at alternative funding options that they had not explored before, irrespective of how much money they have raised,” ECL co-founder Manish Arora said. “Historically, revenue-based financing has typically not been as popular in developing countries like India, but in the past two to three years with the reduced availability of VC funding and venture debt markets being challenged, people have started to turn to alternative financing that was not there before.”

ECL was co-founded in 2022 by Das and Arora. Before founding the business, Das spent more than 20 years in the industry as chief risk officer at multiple organizations, including Kabbage (now a part of American Express), in both commercial and consumer finance sectors. Arora has worked extensively as a senior leader in B2B SaaS, fintech and regulatory technology spaces, most recently as the general manager, South Asia for PayJoy, a San Francisco-headquartered B2B SaaS fintech.

"We are excited to co-lead Efficient Capital Labs' Series A funding round,” said Aaron Holiday, co-founder and managing partner at 645 Ventures. “ECL's innovative approach to revenue-based financing for cross-border B2B SaaS companies in the South Asia-U.S. corridor is a game-changer. Their ability to evaluate revenue across geographies and provide non-dilutive capital solutions sets them apart. With an exceptional team and deep domain expertise, they achieve best-in-class unit economics for a revenue-based finance business. We are thrilled to support their continued growth and expansion into new markets.”

“We have been amazed with the unit economics, credit performance and growth that Kaustav and Manish have been able to achieve since our initial investment over a year ago,” said QED Investors Partner and Head of Asia Sandeep Patil. “They have surrounded themselves with a terrific team and we are excited to double-down on our partnership -- this round sets the company to explode its TAM and achieve escape velocity.”

ECL raised a $3.5 million seed round led by 645 Ventures in April 2022, followed by a $15 million debt facility in November 2022 which it updated to a $100 million SPV in June 2023, and a further $7 million pre-Series A round which it announced in July of 2023.

ECL currently has 25 employees located between the U.S and India. The company expects to grow to 30-35 employees by the end of year, including plans to hire a CRO/CMO, a head of business development and partnerships and additional engineers.

About ECL

Founded in 2022, Efficient Capital Labs is a New York-headquartered fintech that provides non-dilutive capital to B2B SaaS companies operating in the South Asia-US corridor - i.e., companies that generate a majority of their revenues from the US or North American market while maintaining a significant part of their technology, product development, and operations teams in South Asia. Efficient Capital Labs provides revenue-based financing to its clients and deploys capital out of its own balance sheet. To learn more about Efficient Capital Labs please visit: https://www.ecaplabs.com.

About 645 Ventures

Founded in 2014, 645 Ventures is an early-stage venture capital firm that partners with exceptional founders who are building iconic companies. We invest at the Seed, Series A, and growth stages, and leverage our Voyager software platform to enable our Success team and Connected Network to help founders scale to the growth stage. Select companies that have reached the growth stage include Iterable, Goldbelly, Resident, Shift5, Lunchbox, and Squire. Our exits include FiscalNote (NYSE: NOTE), Oort (acquired by Cisco), Betterview (acquired by Nearmap), Aryeo (acquired by Zillow), and Rosie (acquired by Instacart). 645 manages $550m+ in AUM across 5 funds, and is growing fast with backing from leading institutional investors, including university endowments, funds of funds, and pension funds. The team has prior experience from top VC firms and financial institutions including Insight Partners, Vista Equity, Thrive Capital, First Round Capital, Goldman Sachs, and Volition Capital. The firm has offices in New York and SF, and you can learn more at www.645ventures.com.

About QED Investors

QED Investors is a global leading venture capital firm based in Alexandria, Va. Founded by Nigel Morris and Frank Rotman in 2007, QED Investors is focused on investing in disruptive financial services companies worldwide. QED Investors is dedicated to building great businesses and uses a unique, hands-on approach that leverages its partners’ decades of entrepreneurial and operational experience, helping companies achieve breakthrough growth. Notable investments include AvidXchange, Betterfly, Bitso, Caribou, ClearScore, Current, Creditas, Credit Karma, Flywire, Kavak, Klarna, Konfio, Loft, Mission Lane, Nubank, QuintoAndar, Remitly, SoFi, Wagestream and Wayflyer. Visit www.qedinvestors.com.

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Kaustav Das
media@ecaplabs.com

Source: Efficient Capital Labs