Explore in-depth guides on growing your SaaS business.
When It Comes to SaaS Success, the End Justifies the Means
You know that you have a variety of funding options to support your SaaS success strategy. But as an owner of a SaaS company, choosing the right avenue means not only focusing on how that source of capital will benefit the organization now but also how it will benefit the company — and you — down the road. Eventually, you may decide to exit, perhaps due to a merger with another organization or the sale of a company to another entity or investor. Whatever the reason may be, you’ll need to consider what happens later in addition to how your funding will be used today.
It’s likely that you’ve already explored multiple options for SaaS funding throughout your time starting and building the company, but as you’ve probably discovered, not every funding option leads to the same financial outcome.
For example, equity-based funding is an extremely popular form of growth capital, especially for more established companies, but achieving SaaS success with this avenue can look quite different from other solutions. The journey itself from funding to exit will also look different, as you’ll have to consider additional perspectives and opinions at a leadership level. Equity investors will occupy a seat on your board, meaning their input must be considered in decision making. When the time comes to exit, you as an owner will have to buy out that investor — reducing your overall proceeds.
Self-funding is also very common for early-stage SaaS companies. Often, this is because investors aren’t ready to risk their funds on companies still trying to cement their respective positions in the marketplace. That and early-stage companies don’t yet have the recurring revenue needed to sustain a financial obligation like equity or debt funding. As the company grows, however, these avenues won’t help you achieve specific financial goals. Sure, in the end, you won’t have the repayment obligations or other challenges, but your level of SaaS success won’t be where it could’ve been with other solutions.
Venture Debt Produces Results Now — and in the Future
When it comes to achieving SaaS success and maximizing your return as an owner down the road, venture debt funding is perhaps the best solution. There are a number of reasons for this, including the fact that there’s no equity dilution, no loss of a board seat to an outside partner, greater flexibility in terms of how the funding can be used, and more. These are amazing benefits that produce a positive impact immediately, but let’s think long-term about how this form of funding can support your business.
1. You’ll Be More Nimble as a Company
We’ve already touched on it, but one of the most important benefits of venture debt funding is the fact that you don’t have to give up equity or a board seat to get it. You might think it’s not a big deal to do that, but remember, equity investors’ perspectives and opinions have to be considered — and if they’re a majority shareholder, you won’t have a choice. With venture debt funding, you remain in complete control.
That’s because venture debt is a flexible loan that’s built to support your growth goals and strategy — not provide you with an excess of funding that you might not be prepared to manage or even need. You can use the funding for sales, marketing, hiring, and other growth-focused needs. If you need more, additional funding may be available through tranches. Ultimately, it’s a more flexible solution for SaaS success that keeps you moving forward, focused on what’s most important to the business right now, remaining in a stronger position to switch gears, and ultimately enjoying a more advantageous exit.
Which is right for you? Equity and debt funding have their respective advantages. Our team can help you determine the right choice for your growth goals. Get started now.
2. Your Customer Base Will Grow Faster
Your customer base is at the heart of nearly every business move you can make. For example, you can’t scale up to the next level without attaining a certain level of monthly or annually recurring revenue, and that’s directly tied to your customer base. With other sources of funding, you may not be able to apply that funding to growth-focused areas such as sales and marketing. Additionally, you may not be able to hire key positions such as sales leaders, additional marketing specialists, or customer success team members.
But through venture debt funding, investing in these areas is precisely what you’ll be able to do because that’s what this avenue was designed for. With more resources poured into these growth-focused parts of your business, you’ll be able to gain the tools you need to build out stronger programs, conduct outreach efforts more often, create more effective and compelling messaging and offers, create more prospect touchpoints with a larger marketing and sales team, and much more.
3. You’ll Achieve Your Goals Faster
While you might be cautious about using equity-based funding or venture debt, the reality is that these solutions are designed to help your business. For debt funding in particular, the focus is on acceleration. The resources you receive can be directly applied to efforts that will open the door to the tools and options that otherwise might take longer to access. Those resources will also help you grow your customer base and therefore your revenue.
Ultimately, venture debt funding helps you put your foot on the gas, achieving new levels of growth that otherwise would take much longer to realize. And through that acceleration, your longer-term goals come that much closer into reach, allowing you to focus on other strategic moves, make your company more appealing and valuable, and realize a greater return when the time comes to make your exit.
Achieve the SaaS Success You’ve Always Wanted
River SaaS Capital is a leading provider of venture debt funding and equity-based funding for SaaS companies. Our flexible terms, partnership approach, and commitment to your success makes us the ideal choice for obtaining growth capital. In every relationship, we work closely with the owners and leaders of growth-minded SaaS companies, advising them on best practices, helping to develop strategy, and providing recommendations that will help them leverage our funding for true long-term success.
If you’ve been looking for a way to achieve SaaS success, our team is ready to help. Contact us today to learn more about our funding solutions.
