Story image

New funding model set to revolutionise Australia’s SaaS market

27 Jun 2017

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.”

Microsoft urges organisations to tackle data blindspots
Despite significant focus placed on CX transformation, over a third of Australian organisations claimed that more than one in five of their projects failed.
Raising the stakes: McAfee’s predictions for cybersecurity
Security teams and solutions will have to contend with synergistic threats, increasingly backed by artificial intelligence to avoid detection.
Renesas develops 28nm MCU with virtualisation-assisted functions
The MCU features four 600 megahertz CPUs with a lock-step mechanism and a large 16 MB flash memory capacity.
DOCOMO ranked world's top mobile operator in 5G SEP applications
NTT DOCOMO has been ranked the world's leading mobile operator in terms of applications for candidate standard-essential patents.
Exclusive: Ping Identity on security risk mitigation
“Effective security controls are measured and defined by the direct mitigation of inherent and residual risk.”
CylancePROTECT now available on AWS Marketplace
Customers now have access to CylancePROTECT for AI-driven protection across all Windows, Mac, and Linux (including Amazon Linux) instances.
Gartner’s top 10 data and analytics trends for 2019
Data is the fuel for the modern world, and analytics the engine. Gartner has compiled the top 10 trends to watch this year.
How CIOs can work with colleagues to drive new competitive advantages
"If recent history has taught us anything, it’s that the role of the CIO is always changing, and that it won’t stop changing anytime soon."