Arc Technologies: Helping SaaS Startups Shine
Arc provides SaaS companies with fast, non-dilutive growth capital
The demand for SaaS (Software-as-a-Service) solutions continues to flourish, with the estimated global market value sitting at $172 billion in 2022. Unfortunately, while companies like DocuSign and HubSpot have seen significant success and growth, today’s SaaS startups are finding it time-consuming to raise the capital to scale their platforms. SaaS founders typically have only two viable options for raising capital — an equity round or a debt round. Both options are expensive and require long lead times.
Alumni Ventures portfolio company Arc Technologies supports SaaS startups by giving them access to fast, non-dilutive growth capital based upon customer’s SaaS revenues and customers. By integrating with customers’ backend financial systems, Arc can make real-time underwriting decisions algorithmically to provide software companies with capital quickly without dilution or debt. An upfront cash outlay is provided to the company and Arc is paid back over a period of 12 months. This cash outlay that Arc provides is supported by a warehouse debt facility.
Significant Traction & Long-Term Vision
Arc’s first product is a revenue-based financing alternative that converts contractually recurring revenue into upfront financing. The company’s platform looks at key contract metrics to underwrite each opportunity and assigns a “risk score” to each company to create a financing plan. Arc then profits by taking a percentage of the amount financed per transaction.
Arc has already served over 100 startups, including B2B SaaS companies backed by established VCs like Accel and TigerGlobal. Arc also has a long-term vision of becoming a full-suite digital investment bank that will offer ancillary services.
What We Liked About Arc Technologies
Experienced Lead Investor: NFX is an established Seed investor with notable investments in Hippo, Poshmark, DoorDash, and Lyft. NFX founder James Currier is also on Arc’s Board of Directors.
Growing Market Interest & Opportunity: There is an increasing interest in non-equity financing options and a significant market opportunity for any company with a recurring revenue business model to be a potential customer, regardless of its size.
Passionate & Experienced Team: Co-Founders Don Mui (CEO) and Nick Lombardo (COO) were inspired to start Arc after seeing the limitations of traditional capital raising while working in private equity in New York. Between Mui, Lombardo, and CTO Raven Jiang, the team boasts a powerful, complementary mix of financing and engineering skillsets. To supplement the direct team, Arc also taps some key advisors from private equity firm KKR and the SEC.
How We Are Involved
Triphammer Ventures (for the Cornell community) and Waterman Ventures (for the Brown community) deployed capital in Arc’s $161 million equity round led by NFX. Other participating investors include Y Combinator, Bain Capital Ventures, Clocktower Technology Ventures, Torch Capital, Will Smith’s Dreamers VC, Soma Capital, Pioneer Fund, and Atalaya Capital Management.
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