SaaS - Debt Financing Solutions | Hercules Capital

Flexible and Highly Customized SaaS Financing Solutions to Meet Your Company’s Specific Needs

Hercules Capital SaaS Finance can provide loans ranging in size from $1.0 million to $100.0 million, with the ability to provide additional tranches of structured debt growth capital such as asset-based lending (“ABL”) to term loan financing solutions or acquisition financing.

Hercules Capital SaaS Finance aims to fill the void in the software and technology lending markets by offering a flexible solution based on MRR or ARR and other applicable metrics for SaaS companies. Given our balance sheet of over $1.7 billion in total assets, we can provide more capital than typically any other capital provider in SaaS financing solutions. We generally make SaaS lending solutions available between 1x to 3x ARR to be drawn as needed. Since we structure SaaS loans based primarily on revenue growth and the available amount of capital is driven off of multiples of MRR or ARR, the total borrowable funds can increase as revenue grows or key metrics improve.

Work with us

Hercules Capital SAAS Finance Team

SaaS Finance Team

Steve Kuo Senior Managing Director
Thomas Harris Managing Director
Catherine Jhung Managing Director, BD

Hercules Capital SaaS Finance offers creative and flexible lending products meant to fill the void left by traditional senior lenders. The overall cost of capital is significantly less than equity.

Target Profile

  • Generally, post commercialization and proof of concept (Beta) completed
  • Monthly recurring revenues (“MRR”) of $500,000 or greater per month with a demonstrated rapidly growing backlog of new customers
  • Strong customer revenue retention rates
  • Diversified customer base
  • Not required to be operating cash flow break-even
  • Have a viable financing plan to achieve positive cash flow breakeven with 24-36 months; special exceptions made for companies with rapid growth or other collateral support
  • Loan to Values (“LTV”) typically < 50% Enterprise Value
  • Backed by venture capital or select private equity firms

Software
Application software
Healthcare IT
Data analytics “Big Data”

eCommerce
Tech enabled services
Security
Mobile

Digital media
Gaming
Among sectors

Value Creation

Hercules Capital SaaS Finance provides growth capital after Series B financing rounds, offering leverage on expensive equity to minimize founders/management team and early stage investors dilution. By using a SaaS capital financing solution, borrowers are generally able extending their company’s runway, delay raising equity and establishing meaningfully higher metrics and valuations prior to needing to raise as they focus on adding significant performance achievements.

Hercules Capital SaaS Finance business model is well suited to accelerate shareholder value and ultimately returns with innovative SaaS financing solutions as modest increases in annual recurring revenue (“ARR”) translate into higher equity values that far outweighs the cost of capital.

Common Uses of Capital

  • Scale MRR or ARR
  • Grow sales force
  • Interim financing in between rounds or growth capital to help drive increase equity value
  • Working capital and growth investment
  • Liquidity for early venture or angel investors and in select case for founders and/or management
    Acquisition capital

Hercules Capital SaaS Finance provides a broad range of financing solutions to high growth SaaS companies ranging from first lien senior secured to select second lien or subordinated loans with terms ranging from 6-to-60 months.

Hercules Capital SaaS Finance will also selectively evaluate potential bridge finance lending opportunities and other special situations, on a case by case basis.

Contact Us

Submit a business plan to our SaaS Team,
or just drop us a line.