Good morning folks!
Yet another Monday morning in lockdown/shelter-in-place but things look to be getting better so that’s encouraging. Found a couple interesting pieces of new today, SoftBank is still “open for business” & a new SaaS venture debt fund that started in 10 days.
➡️ Read a really fascinating interview of Rajeev Misra (Vision Fund CEO) this morning where he mentions that SoftBank still has $13B to deploy from the Vision Fund.
➡️ He also mentioned that SoftBank was looking closely at the Indian ecosystem and is in mid-stage talks with 15-20 companies for primary and secondary investments.
➡️ I found the part about secondary investments particularly interesting as SoftBank is interested in buying secondary positions from earlier-stage investors in India who are looking to deliver returns on some of their older funds.
➡️ I would assume this potentially relates companies who raised some of their earlier rounds of funding several years ago. And with public exits seeming impossible (and acquisitions possibly not being possible in the current climate), secondary exits to SoftBank will provide some liquidity to Indian VCs where we haven’t seen too much cash-on-cash returns.
➡️ Mishra also mentions that he envisions a rise in consolidation, especially in industries like eCommerce and online groceries & pharmacies. Some of SoftBank’s companies have also been involved in M&A talks quite recently (Uber Eats India, Grofers)so seems like we will see a couple more.
➡️ We also saw the launch of a new venture debt fund for SaaS startups launched by the SaaSBOOMi team. Some of the people who are leading this initiative are Vinod Muthukrishnan (Ex-CloudCherry which exited to Cisco) & Pallav Nadhani (Ex-FusionCharts which exited to Idera, Inc)
➡️ But first off, what is a venture debt fund? This is quite different than equity investments in startups which are more popular amongst early-stage companies, and in essence debt financing for startups. SaaSBOOMi is providing working capital loans for SaaS startups, where the cos will payback the loan from their monthly revenue.
➡️ There are certain limitations on companies which qualify, as the fund is only looking at companies that are somewhat established (24 months in operations & 12 months of recurring revenue) with at least 6 months of revenue stability.
➡️ The companies who apply for funding are also required to have a minimum of $250k in ARR, and what’s quite impressive is that the turnaround on the loan will be less than 14 days. This will hopefully help several companies who have built great businesses but whose customers might be affected by the pandemic. In the words of Alex Danco (who just joined Shopify’s working capital team) “Debt is Coming”- https://alexdanco.com/2020/02/07/debt-is-coming/
Feedback & ❤️ always appreciated
More on Monday :) BONUS (Tweet of the day): https://twitter.com/_surgeahead/status/1254614397936254977