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Efficient Capital Labs (ECL), a New York-based startup, has secured $7 million in funding led by QED Investors. The company provides revenue-based financing to B2B SaaS companies operating in the South Asia-U.S. corridor, offering a percentage of their annual recurring revenue (ARR) as upfront capital.
Bridging the Cost of Capital Gap
Founded in early 2022 by Kaustav Das and Manish Arora, ECL aims to bridge the cost of capital gap between geographies. The company focuses on pre-seed, seed, and Series A startups, charging a fixed fee of between 9% and 12% of the upfront capital it provides. Most of its loans are made on 12-month terms.
Das, who has worked in various risk-related roles over the past two decades, including as the chief risk officer of Kabbage, Petal, and Quadpay, identified the opportunity for revenue-based financing in South Asia during a visit to India in 2021. He noted the rapid growth of the SaaS sector and the high cost of capital, despite the increased availability of funding in India.
A Unique Approach to Financing
ECL’s approach to financing is unique in that it funds customers through its balance sheet. This allows its customers to access capital at a much lower cost and without the uncertainty that comes with depending on third-party investors or marketplace dynamics to receive capital against revenue.
The company is currently focused on the U.S.-India and U.S.-Singapore corridors, providing dollar-denominated loans to U.S. entities with U.S. bank accounts. ECL has originated more than $13 million in loans with zero defaults, serving 43 SaaS companies so far.
The Future of Efficient Capital Labs
With the recent funding, ECL plans to expand its services and reach more retail partners around the world. The company is the only platform that performs dual risk assessment in both geographies, according to Das. This allows ECL to follow the entire course of the funds, from the U.S. bank account to its usage in the other country, providing a level of visibility and control that other platforms do not offer.
As the SaaS sector continues to grow in South Asia, ECL’s innovative approach to financing could play a crucial role in supporting the growth and development of startups in the region.
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