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Enter , which this morning announced it raised $6 million in seed funding led by .

, and founded Pipe in September 2019. Their goal is to offer SaaS companies a way to grow without diluting their current cap table.

Pipe claims it does this by offering an instant cash advance against the full annual value of a company’s software subscriptions. So basically, according to co-CEO Hurst, it turns monthly recurring revenue into annual recurring revenue.

“We built this for SaaS companies because they, in particular, benefit from immediate payment,” he wrote via email. “With Pipe, they don’t need to discount revenues to entice customers to prepay.”

, , ����dzܲԻ�����, General Counsel , , and also participated in the round. (There’s been a recent trend of startup founders investing in other startups as of late, such as in the case of Front, which we wrote about here.)

The premise behind the Los Angeles-based company was appealing to , co-founder and general partner at Craft Ventures. Historically, he said, the main financing option for SaaS companies has been dilutive equity rounds.

“Pipe is the tool every SaaS founder has been waiting for,” he said in a written statement. “It allows SaaS companies to grow without dilution by financing their SaaS receivables.”

How it works

Pipe says it is addressing a (as of 2018), which is growing by double-digit percentages year over year.

The Pipe’s platform assesses a customer’s key metrics by integrating with its accounting, billing and subscription management systems. It then makes “an instant decision on whether the company qualifies for a PipeLine of finance.” Facilities range from $10,000 per month to several million dollars per month for later-stage companies.

I was curious as to how Pipe could provide such facilities with just $6 million in seed funding. Hurst told me the company is also backed by debt providers (such as ) to be able to provide the facilities to its customers. But he emphasizes that Pipe is “not providing debt,” and is “not a loan.”

CEO said his SaaS company has risked losing deals in the past by requiring annual upfront payments when customers wanted to pay monthly.

“Pipe solves this for us and allows us to invest more heavily into our growth,” he said. “It may easily save us a fundraise.’’

Pipe has only officially been in the market for a few weeks but Hurst said it’s been “growing 100 percent week-over-week during beta.” The company is officially launching out of beta today.

The six-person company plans to use its first round of funding to expand its sales and engineering teams out of its L.A. headquarters and in San Francisco and Phoenix. But looking ahead, the company considers what it’s doing “as a global opportunity.”

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Craft’s first fund, called , closed $350 million in October of 2017.

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Notably, despite Sacks’s reputation as a SaaS guru, the investments that Craft has made thus far are somewhat distributed. According to of the group’s investments thus far, bets on healthcare-related operations, transportation-focused entities, and blockchain companies comprise a material portion of its deals. The fund has also written checks into the sorts of software companies that we expected.

That Craft’s second fund is larger than its first isn’t a surprise. Crunchbase News has noticed a regular trend amongst investing groups in recent quarters of raising new, larger funds. The current, competitive private capital market is driving valuations up, forcing funds to raise more money or get priced out of deals. Larger funds, therefore, might necessitate even larger funds.

Crunchbase News recently covered the launch of new fund, and a $110 million investing pool aimed at clean energy.

That Craft Ventures raised a second fund so quickly isn’t a surprise when we examine its activity numbers. According to Crunchbase data, the firm has made 38 known investments, including 18 lead checks. You can chew through $350 million (leaving some room for follow-on deals, I presume), quickly with those numbers.

Seeing three new funds that we found worth covering in a single week helps us understand that the current pace of VCs raising from their limited partners (LPs) is still quick. I’ve heard competing statements from venture players concerning the current market for new venture fund raising, with some saying that LPs are active, and some saying that they are more hesitant. Regardless of what we’re being told, however, recent news paints the picture of a busy market.

And that means lots of capital is still finding its way to investors so that they can wager it on companies that won’t likely provide cash returns for years to come; there’s still optimism in the market.

If the fallout from falling share prices of some recent IPOs, or the WeWork fiasco will slow venture fund raising isn’t clear, as the effect from those issues will take some time to work there way into results. Recently, though, private capital feels quite active.

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