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Fintech startup Ratio has raised $411 million in equity and debt funding for what it calls a “new flavor” of buy-it-now, pay-later payments, speculative pricing, financing and a cash quote process.
Co-founder and CEO Ashish Srimal founded Ratio in 2021 with CTO Mason Blake, and have been working on the company’s concept to help SaaS and technology companies tap into the $1.5 trillion subscription market for recurring revenue.
Srimal was previously the founder and CEO of sales mobile assistant startup SmartMe, while Blake previously joined LinkedIn as CEO of B2B legal marketplace UpCounsel.
Their new funding includes $11 million in venture capital raised by the end of 2021 and a $400 million credit facility for customer financing. Investors in the round include Streamlined Ventures, Cervin Ventures, 8-Bit Capital, HoneyStone Ventures and a group of individual investors.
When deploying subscription-based business models, SaaS companies face challenges such as delayed cash flows, discounts, and time to recover customer acquisition costs. For example, if a company signs a contract for $1.2 million, but the client wants to pay monthly or adjust how much they can pay, some companies can’t do that, so they offer 20% or 30%, Sirimal explained. Discount.
That’s where the credit facility comes in: Ratio provides the SaaS company with $1.2 million up front, giving customers more flexible payment options to meet their cash flow needs, making the rebates unnecessary.
“If you have better cash flow in December and summer, you should be able to pick a time to pay for the software,” Srimal told TechCrunch. “For SaaS vendors, they get cost-free capital upfront and can pass on some of the financing fees to their customers.”
With this approach, Srimal believes SaaS companies can sell more and faster as they deploy more repeatable offerings. Ratio’s machine learning technology provides financial and behavioral data to inform providers if they are accurately estimating their enrollment levels and their likelihood of attrition, lifetime value and willingness to pay.
Srimal says he has taken the early-stage approach and “has already done more than half a billion dollars in business.” It has raised more than $5 million in funding so far, and expects to grow to $30 million by the end of the year.
In addition to a heavily booked pipeline, the company has grown 10x in annualized recurring revenue between the first and second quarter of 2022 since going public earlier this year.
Meanwhile, Srimal said, the investment equity is going into the development of financial instrument product and increasing the team of 10.
“The product roadmap is strong, and in the future, Ratio will grow into different aspects and continue to overcome the challenge of enterprise software payments,” Mason told TechCrunch.
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