Story image

New funding model set to revolutionise Australia’s SaaS market

27 Jun 17

Australian finance company Multipli has launched the world’s first subscription prepayment funding model for software-as-a-service (SaaS) companies.

Under this new funding arrangement, Multipli will finance subscription customers for the life of their contract, paying SaaS companies upfront for monies owed from subscription customers.

SaaS startups face a constant cash flow battle as they build new technology, and fund marketing and customer service activities, with only monthly subscription payments from customers to fund their growth.

The result of this inevitable cash flow trough is that many innovative technologies simply don’t get off the ground, or SaaS founders give up valuable equity in the early, formative years to venture capitalists.

John Delaney, Multipli managing director, says the only way for Australia’s SaaS market to become truly competitive on a global scale was to develop viable options to fund the growth of “pay-as-you-use” technology companies.

“Usage-based subscription models are rapidly becoming the way of the future for technology and software companies around the world, and Australian SaaS companies will be unable to compete if we don’t come up with new ways to ensure they can grow and innovate,” Delaney says.

“By funding customer subscription contracts and paying SaaS companies the full subscription amount up front, SaaS clients can fund their own growth from sales.”

Through subscription pre-payment funding, Multipli finances full subscription contract and pays the SaaS company for the full cash amount of the contracted term.

Multipli created the subscription pre-payment funding service eight years ago for one of Australia’s greatest SaaS success stories, LEAP Legal Software.

Christian Beck, LEAP Founder says without this pioneering funding method he would have been unable to achieve the great successes he has for LEAP and data search company InfoTrack.

“Multipli has helped us fund over 5,250 individual client contracts, producing $122million of pre-payments since 2009.

“These prepayments fuelled the growth of both LEAP and InfoTrack,” Beck says.

“In 2009, we needed capital to take LEAP and InfoTrack into the next stages of growth, but we were pre-profit and could not borrow, and we were frustrated that we could not raise capital at a valuation we felt was worthwhile for existing shareholders,” he says.

“Pre-payment via Multipli allowed us to bring our cash flow forward by approximately 18 months, giving us extra cash flow to build both LEAP and InfoTrack into dominant positions without any dilution to shareholders.

“This not only made shareholders wealthy it also allowed our employee share plan to perform exceptionally well,” Beck adds.

“We have created many millionaires from employees of a relatively small software company.”

Object-based storage over-looked by Aussies, survey shows
Hitachi Vantara has sponsored an IDC survey looking at the technology’s usage and adoption barriers across Asia Pacific.
One Identity a Visionary in Magic Quad for PAM
One Identity was recognised in the Gartner Magic Quadrant for Privileged Access Management for completeness of vision and ability to execute.
Accenture 'largest Oracle Cloud integrator in A/NZ'
Accenture has bought out Oracle Software-as-a-Service provider PrimeQ, which now makes Accenture the largest Oracle Cloud systems integrator in Australia and New Zealand.
How to keep network infrastructure secure and available
Two OVH executives have weighed in on how network infrastructure and the challenges in that space will be evolving in the coming year.
White box losing out to brands in 100 GE switching market
H3C, Cisco and Huawei have all gained share in the growing competition in the data centre switching market.
Gartner names newcomer Exabeam a leader in SIEM
The vendor landscape for SIEM is evolving, with recent entrants bringing technologies optimised for analytics use cases.
52mil users affected by Google+’s second data breach
Google+ APIs will be shut down within the next 90 days, and the consumer platform will be disabled in April 2019 instead of August 2019 as originally planned.
Genesys PureCloud generates triple-digit revenue growth year on year
In Australia and New Zealand, the company boosted PureCloud revenue by nearly 100%.