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Podcast: Unique Financing For Your B2B SaaS Company


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“Capchase: fueling the growth of the subscription economy” noted Capchase on their website. A company that works with you to find the balance to grow and build your company and finances.    

In this week’s episode of the Stride 2 Freedom podcast, we spoke with Przemek Gotfryd, Co-founder & COO of Capchase. I brought Przemek on today’s episode because Capchase has introduced a compelling financing strategy for B2B SaaS companies. Essentially, Capchase will pre-fund an annual SaaS contract so that the company can get paid upfront rather than getting paid monthly over the contract term. In business, cash is king, and in SaaS, up-front cash is critical to funding customer acquisition costs. The reason so many SaaS companies stall out is because of a mismatch in the timing of cash collections (relative to the customer acquisition cost). Capchase solves that and by design, liberates thousands of companies to grow without having to seek outside financing from venture investors.

Capchase was obviously a compelling opportunity or Przemek would not have dropped out of Harvard Business School to pursue it. As a past investor, Przemek knows first hand the financing problems that founders face today. The opportunity to provide a service that fronts future expected cash flow without dilution is pretty compelling. Enjoy the episode that will help you think differently about how you fund your growth.   

Who should I interview next? Please let me know by clicking here.                                 


In this Freedom Speaker Series episode with Przemek Gotfryd, you will learn:

  • How to finance your business without taking dilution
  • Why great SaaS companies don’t have to be venture funded
  • Ways that you can strengthen your B2B contracts so they can get financed

Listen Now

We are fortunate to have Przemek available to spend time with us on this edition of Stride 2 Freedom. If there is a speaker you’d like us to interview, click here and let us know. Stay well. Stay safe. Stay healthy.

Show Notes and Links From Episode:

Przemek Gotfryd LinkedIn


Episode Transcript:

Russell Benaroya: Hey, everyone. Welcome to the Stride 2 Freedom podcast. My name is Russell Benaroya and I’m the co-founder of Stride Services, a virtual back office, bookkeeping, and accounting firm serving hundreds of clients around the United States.

This podcast is designed to help small business owners focus on growth and innovation. In other words, focus on those things that inspired you to start your business in the first place. We call it your genius zone.

We do our job on this podcast when business owners feel like they have the trust and confidence to build the right team of partners around them that will help them grow. Thanks for joining. Let’s go.

Hello, everyone. Welcome to the Stride 2 Freedom podcast today. I’m Russell Benaroya, your host of the podcast and steward of this wild and crazy show. Today, I am confident that the business model we talk about will be new to many of you, which is why I’m so thrilled to talk about it. We have Przemek Gotfryd on the show today. Hi, Przemek?

Przemek Gotfryd: Hi, Russell, nice to see you again.

Russell Benaroya: So great to have. Przemek is the founder and CEO of a company called Capchase. I’m going to let him tell you about the business but he has created an entirely new way of helping a certain type of startup get financing. Przemek didn’t take on this commitment lightly. He was at Harvard Business School, left Harvard after a year to pursue this.

So there must be something in the formula that’s particularly compelling or worthwhile to pursue. I’m excited to learn about that. I invited him on because I find the problem that he’s solving so fundamental to companies that need capital to grow.

When I worked in investment banking, I had this trainer. His name was Cash Kushel. I don’t think that was his real name. It would be too perfect. But the big message that he sent that I always remember is “cash is king. The last thing you want to do as a startup is run out of money.

So Przemek has figured out a really interesting model to help companies, hopefully, not do that. Let’s jump in and learn. What do you say? Ready to go?

Przemek Gotfryd: Ready to go.

Russell Benaroya: Awesome. Maybe start, Przemek, by telling us a little bit about your journey to Capchase, how you thought about wanting to solve this problem, and then what is the problem you’re solving and why it matters.

Przemek Gotfryd: Thanks again, Russell, for having me, and I’m excited to be here. The founding team came across the problem that is facing many SaaS founders today, from a couple of angles. A few of us worked at SaaS companies in the past. One was a head of sales, another run tech, and another run product. Then I used to be an investor looking at a lot of early-stage SaaS companies. The question that occurred to both of us that the founders were trying to solve was the ongoing dilemma between trying to figure out how to focus on top-line growth and ensure that you can close as many deals as fast as possible. Then, on the other hand, you want to get that cash that you mentioned upfront. So you really care about cash flow management.

Now, where that demonstrates itself is in the decision you’re making around how you sell. By that, I mean there is a decision that a lot of SaaS companies are taking, which is whether to offer discounts to customers to get the money upfront—which is a wonderful thing for a CFO, but a less wonderful thing for somebody who’s selling the product.

That very often means delays to seeing your top line grow because the negotiation takes a while. So we’re coming in with Capchase to solve that conflict existing between the finance function and the sales function.

More importantly, I think we’re trying to come up with a third way for SaaS founders to think about how to fund their companies. Historically, everybody was focused on getting VC money. And it’s wonderful because you get a lot of help and a lot of value out if you got the right type of fund and the right type of partner on your board. On the other hand, you are selling a chunk of your company. And dilution is probably the most expensive way to get funded.

Then, on the other hand, you could also access venture debt, which is the other alternative that people have always thought about. Now, that takes time. There is a lot of documentation and effort involved in arranging it. We tried to come up with something that is both convenient and scalable, fast, and puts your finances and financing needs on autopilot—which is what Capchase is bringing to market today.

Russell Benaroya: If I was a fifth-grader, how would you explain Capchase?

Przemek Gotfryd:  Imagine that your parents are giving you some pocket money. Or a better example, you have your classic lemonade stand outside the door, and you go out every fourth Saturday of the month, and you sell lemonade to people.

If you go out over the following year, 12 times, you are going to earn some cash every month. Let’s say it’s $100. Now, what if I told you that instead of waiting for that cash to trickle in and see $1,200 over the course of the year, I could just give you almost that full amount upfront today? Then you’re just going to pay me back as you make that money every month. Does that make sense?

Russell Benaroya: Cool. I love the lemonade metaphor. You’ve got confidence, Przemek, that I’m going to generate that $1,200, which we’ll get back to in a second. So obviously, you’ve got enough comfort around my mini lemonade empire. Then I say, “Great. I’ll take maybe not the whole $1,200.” Let’s say you offered me $1,100 or $1,000. Then what you’re saying is, “Hey, little fifth-grader, as you generate cash from the lemonade that you sell in the future, you’ll use that to pay us back.”

Przemek Gotfryd: Exactly. The way that translates into the reality of a SaaS company is we can either talk about contracts, which are fixed in-term. So you’re signing a contract for the next 12 months and we know how much is going to be coming in every month. Or it could be a monthly rolling contract, which is from month to month, but we have fairly good data about past retention. We can predict with relatively high certainty that that cash will be there and will be coming back to the company.

Russell Benaroya: Got it. Again, in the lemonade example, if you knew that I had an agreement with a set of customers that they were going to come back every month and buy my lemonade, that would give you comfort that I’m going to generate that $1,200? 

Przemek Gotfryd: Exactly. Yes, if you can contract your lemonade sales, that would be ideal and perfect.

Russell Benaroya: That’s awesome. Just for everybody’s clarification, when we use the acronym SaaS, we’re talking about software as a service business. Could you just talk elementary, Przemek, about what we mean when we talk about software as a service? Maybe some examples which would be obvious to people and what is it about the attributes or characteristics of those types of businesses versus non-SaaS businesses that may also have some recurring revenue or some stability of recurring revenue?

Przemek Gotfryd: That’s a great question. When we think about software as a service, a classic example, which is the company that effectively came up with the category, is Salesforce. So you talk about a company that would be hosting their application in the cloud, what is called a single instance. The same piece of code could be used by multiple different users, multiple different customers without being replicated for everybody.

It would effectively be beamed to multiple customers and the information will travel both ways. What makes that business model beautiful is it is extremely scalable because once you write that piece of code, it can work for every customer and every use case. Instead of being replicated like in the old days with on-premise software, where it’s a server sitting at the back of your office, it’s all hosted in the cloud and it’s distributed in a very scalable way.

Now, when you think about what that means in terms of the financial characteristics of that business, and your ongoing cost of sales in your P&L is very low because of that scalability feature. That means that these businesses have extremely high gross margins, very often in the 80 and 90 percentages. What also is a strong characteristic of a Saas business is the high recurrence of revenue. Very often, these applications will be critical to running a business that buys it. It could be an enterprise resource planning platform where your organization is run from. It could be a cybersecurity solution which you rely on, on a daily basis.

What that means is that once a customer purchases that software, they’re very likely to keep on using it and keep on paying for it for many months to come. Hence the high retention metrics that give us as Capchase comfort around high recurrence of the revenues in the future.

Russell Benaroya:  Essentially, you’re getting confidence that they’re going to generate revenue with a fair amount of stability; that they’ll be able to pay you back. Then, presumably, they’re paying you back more than you’re lending and that’s where you make your money, right?

Przemek Gotfryd: Exactly. We are advancing money based on the future expected stream of cash flows. When we evaluate a business to advance the money, we come up with a discount rate that we apply to whatever the cash flows are that we will be advancing. They see that cash on day one. And only when their end customers pay them the contracted amount, it is only then that the funds make it back to us.

The customer needs to pay the SaaS company for us to be repaid, which is very convenient because we aren’t requesting money in advance of them seeing that cash in their bank account.

Russell Benaroya: One of the presentations I often give is around the unit economics of recurring revenue businesses. We talk about the difference between how much it costs to acquire a customer and then the intended lifetime value of that customer. What’s amazing is just how sensitive churn is on lifetime value.

There’s so much value in the retention of a customer because you pay a lot of money upfront. That lemonade stand pays a lot of money to get that customer the first time; you want them to keep buying lemonade for as long as possible.

Is it because it can be pretty expensive to acquire the customer, and we talk about acquiring through sales and marketing efforts, that generally bootstrapping or not having an outside source of financing like Capchase or venture debt or venture capital makes it really hard to grow a SaaS business without it?

Przemek Gotfryd: It is extremely hard to grow any business, and it is even harder to bootstrap a business. All of us at Capchase have a ton of respect for founders who are going to and bootstrapping their businesses. It takes an incredible amount of hard work as both you and I know. What is exciting is those founders end up keeping up to 100% of the equity. Then when they sell the business in the future, they get all the proceeds instead of sharing it with, very often, a long cap table.

Why we think what we bring to the market is also very exciting for bootstrapping founders is because we effectively allow them to unlock cash they will be seeing at some point in the future, that they have already earned. Because they’ve paid that customer acquisition cost (CAC) for that particular customer in order to sign the contract and start providing the software. But the cash they see is, very often, months away.

If they could, to your point, recover that CAC faster, or ideally, within the first year within the first 12 months, that’ll be a fantastic outcome. Now, if we’re able to bring the next 12 monthly payments at a very high gross margin into their bank today, that is exactly what happens. The payback period is dramatically shortened. They can reinvest the money into acquiring more and more customers and hopefully building a healthy bootstrap business that way. 

Russell Benaroya: They also have to be prudent or disciplined, I imagine, around how they manage their expenses. Well, maybe not just manage expenses, how they utilize that cash over the coming months. If I got it upfront and let’s say I went and ran a big marketing campaign, and now I’ve got to pay you back, which means I don’t have the cash to pay my employees, is that where things can get a little bit tricky? What’s your role in helping guide a founder to be well planned in how to manage this relationship? 

Przemek Gotfryd: You hit the nail on the spot it is. Very often you’re choosing between peace of mind, which is just an additional runway because if you get cash today, that might give you 12, 24, 30 months of runway ahead. Or maybe you want to step on the gas, provided that your lifetime customer value (LTV) to CAC equation makes sense or stays above one for a reasonable period of time.

What we are helping founders to do is we’re in the process of rolling out a set of analytics, where they will be able to plug in both their sales data, which is about the customers that are in the funnel, and money they are spending on Google ads, Facebook ads and also on their sales folks. Together with the data around how many customers they acquire to figure out the acquisition cost.

That analytics suite should provide them with certainty around, “If I step on the gas a little faster, I have the comfort of knowing that all of that spend is still profitable and it makes sense when I fast forward 12, 24 months down the line.

What we’re in the process of building out is exactly that kind of toolkit that can be used for any company that starts working with us to help forecast the cash flows one, two years in advance, taking into account the fact that they might be stepping on the gas and accelerating customer acquisition.

Russell Benaroya: That’s a really good point. What you’re saying is they now will have cash on their balance sheet, some of which is technically encumbered. Meaning it is effectively owed back to you through their future sale. So cash is king, but not all cash is the same. It’s not all free cash.

Przemek Gotfryd: Correct. That is exactly what needs to be taken into account. When you think about the uses of cash, there are multiple. As a founder who is trying to focus on coming up with a fantastic product, then bring it to market, and then pushing it out there, you don’t want to be spending time thinking about their back-office operations and how to ensure that the company has enough cash so that it can operate.

That, in our view, should be put on autopilot, which is what we’re trying to bring forward. We give you the security around the runway, make sure that you don’t need to be thinking about collecting cash from customers, are people overdue on their payments, and importantly, trying to avoid dilution. So getting the cash without selling your company.

Russell Benaroya: It seems like this is such a needed problem to solve in the market. The market, historically, around financing for SaaS businesses has either been no financing, or you raise venture. Venture investors have a certain profile of businesses that makes their business work, which is: do I see this business being a billion-dollar-plus opportunity? Well, if it’s a $100 million-plus opportunity, that’s not interesting to them, but that’s a pretty awesome business to be built.

Is that part of the problem that you solve? Which is: there are a ton of businesses out there that might be worth $10, $20, $50, $100, $200 million, what financing options are available to them?

Przemek Gotfryd: 100%. And if I put you in the shoes of a founder of a company that’s worth $50 million, and if you’re able to liquidate it tomorrow, and if you own100% of it, I guess you’d be a very happy person. You hit the nail on the spot.

The way venture math works is for every 10, 20 companies they invest in, they are looking for the one well-known-by-now unicorn company they can sell, if required, for a billion-plus. And that really makes the return to fund a few times if it happens.

There is this whole universe of companies that are perfectly healthy, very often bootstrapped, and running breakeven precisely because they don’t want to be selling equity, but at the same time, a lot of cash tied up in operations in contracts they’ve already signed. So this is bringing this pathway for founders that are happy building businesses which are sustainable. Maybe a little bit slower growing, but still solving very critical needs for masses of customers out there. And they don’t want to be selling their company or sometimes feeling the pressure of a venture capital firm at the monthly board meeting, which is predominantly around multiplying your revenue month by month. 

Russell Benaroya: Are there a number of companies like you in the industry? Who’s your company? Also, any other innovative or creative mechanisms that you’ve seen in the market to help solve this or address this dislocation?

 Przemek Gotfryd:  Other than the venture capital and venture debt players which are relatively well-known to people out there, there are also other types of companies that do something slightly different, although still trying to give you money today in exchange for taking a cut of your revenues a little bit further down the line.

Companies like revenue-based finance companies. They will advance you the money today and then for a period of several or many months, they’ll clip X percent of your top line, before they recoup, let’s say, 1.2, 1.3X, whatever they have advanced you.

The interesting thing about it is that if your company is growing rapidly, they will recoup that 1.2, 1.3X your money in a matter of a few months, which means that the effective cost that you’re paying can be pretty steep. Now, it still might make sense for a fast-growing company.

I think it is certainly suitable for a lot of types of companies out there. I know it works very well for e-commerce companies, where those revenues, as opposed to SaaS, are not as well contracted or not as predictable. We think that, especially for SaaS, with their high predictability of revenue streams, what we offer, which is helping you accelerate what you expect to the present day, just completely makes sense.

Russell Benaroya: How do you manage your risk?

Przemek Gotfryd: We have a lot of very talented colleagues with master’s degrees in data science and with a lot of experience automating things. The way we look at a company is within a few minutes, they can come to our website and connect their bank account, their accounting system, their subscription management platform like Stripe, we currently use Chargebee.

We then assess the risk of that company staying alive or going out of business or the probability of default over the next couple of years. We look at things like cash balance; what the burn is today. We look at retention metrics, which are impacting the lifetime value of their customers. We look at customer acquisition costs.

All of that is done within a few hours. Then we very rapidly get back to THE company with a decision. Then after we disburse the funds, we monitor a lot of these metrics in real-time for our comfort so that we know how risk is changing from day to day. Also, we do that for us to offer all these analytics and support tools for the founders out there. The tools around cash flow forecasting, which we’re in the process of creating, and other helpful things that need real-time data for us to provide.

Russell Benaroya: It’d be cool if you turn some of those analytics around probabilities of success out to the client so that we could put in our data and run our own sensitivities in the same way that you’re looking at us. It might be interesting for us to look at ourselves and evaluate, how do I need to move the levers to either work with Capchase or just stay in the game?

Przemek Gotfryd: 100%. If you go to our website, you can see our runway calculator, which is based on your metrics and it takes a couple of minutes to fill in. You can see how many months of extra runway, basically the cash, that you have already earned over months of painful selling. It’s bringing how much of that cash can be accelerated to today and reinvested into growth. That can be done today.

What we want to offer as well is to help founders plan their capital strategy going forward. Like, when should I be raising capital? How much should they be raising? What should I be raising for? Those are all very important questions that take a lot of mind-space of founders. And given that all the data is out there and we can ingest it, we just want to put it at their fingertips.

Russell Benaroya: I can see that being really valuable. Share with me, Przemek, what milestones or moments in your life brought you to this point of breaking out on your own and starting this business? All of this comes from somewhere right inside of you. When you were a kid, you had moments. I’m curious if you could share some that shed a little bit of light on who you are as a founder? Sorry, I didn’t prep you for that question.

Przemek Gotfryd: I grew up in Poland. I was born in the year that communism fell, 1990. I was very fortunate to have very hardworking and very loving parents. When I was 17, I moved to the UK on my own, first to high school, then to university. Then spent several years working in London as a consultant.

Then I got interested in the technology sector. I found that the people I was advising as a consultant, which I enjoyed talking to the most and seemed smartest, were people who knew about tech because it was so rapid and fast developing.

So I went on and joined a firm called TCV, a growth equity firm headquartered in Silicon Valley. I evaluated probably hundreds if not thousands of tech companies over the years with TCV. That also gave me part of the inspiration to get together with Miguel, Luis, and Ignacio when we started the business earlier in 2020.

We were seeing a lot of founders, in this case, of SaaS companies try to figure out how to marry finance with sales, so this conflict of interest, and how they think about growing their companies more efficiently. That part came back then.

I was very fortunate to be admitted to HBS in 2019 where I met Miguel, who’s the CEO. In turn, he happened to work before with Ignacio and Luis. So we came together early this year to kick things, driven by the same purpose.

Russell Benaroya: Let me clarify because I did say founder, but I’ll say co-founder because it took a village. It sounds like you’ve got a great team of people. Let’s acknowledge it takes complementary skills to come together to make this happen.

Well, Przemek, thank you so much. Do you have anything that I didn’t ask you that you would want to share about you or Capchase as some additional information that might be helpful?

Przemek Gotfryd:  Everything we do, and by now we’re a team of 15 or so, we’re doing to make the lives of founders easier. Being founders ourselves, we see how much grit and hard work it takes to get a business off the ground, to build it to be big and successful. So if we can help some of the SaaS founders out there, we would just really love to talk to anybody that we could be helpful with.

Thank you so much for having me, Russell.

Russell Benaroya: It’s such a pleasure having you on. I share because I have been in this role, the existential pressure that we face as entrepreneurs and founders of a tech company. To not know whether three months from now or six months from now we’re going to have the capital to still be in the game is exhausting.

It’s motivating on one level. On another level, fear has the effect of lowering your IQ sometimes. So thank you for helping retain that and creating some space for founders to be able to step back and be a little bit more thoughtful around how they make business decisions.

I was super happy to have you on today, Przemek, on this episode of Stride 2 Freedom. The more that we can provide avenues or vehicles for business owners to think about how to finance their growth, the better. That’s a role that we want to play. I wanted to give our listeners an opportunity to not only learn about your business but also learn about this really cool instrument that Capchase has created.

Thank you for joining me. 

Przemek Gotfryd: Thanks so much, Russell.

Russell Benaroya: Thanks, everybody, for listening. Talk to you next week on the next episode of Stride 2 Freedom. Bye-bye


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