The London/Berlin-based Vitt has announced a $15 million (equity and debt) pre-seed funding round, adding another participant to the revenue-based, non-dilutive financing game. A more appealing alternative to conventional methods of either constrictive loan or dilutive equity funding rounds, the platform gives SaaS enterprises the option of raising expansion capital based on annual recurring revenue streams.
In the cash-up-front game, Vitt, which in Hindi means “finance,” now joins the ranks of similar offers Ritmo, Requr, Viceversa, and just revealed participant, Berlin’s recap.
High-growth SaaS enterprises just need to finish a 5-minute application procedure that includes connecting the business’s accounts to Vitt’s systems if they have a baseline of a provable ARR of £100,000 per year.
Following this, Vitt’s proprietary data algorithm assesses key parameters, such as growth and churn, and can provide a yay or nay decision in less than 24 hours.
Recap: Vitt offers clearance in under 24 hours, recap offers approval in under 48 hours, Ritmo offers approval in “up to 24 hours,” Requr offers approval in “within hours,” and Viceversa offers approval in up to 72 hours.
In the event that an application is accepted, Vitt can provide a startup with 12 months of upfront capital at a slight discount to the anticipated value of the cashflow. The “discount” is the foundation of Vitt’s business strategy. An illustration: Vitt contributes $115 upfront, earning the business $5, if a SaaS subscription model is based on a monthly cost of $10 ($120 annually).
“Over the course of my three years in venture capital, I quickly realised how little the “VC product offering” was for business owners. In addition to being slow and requiring a multi-week C-level rigorous exercise, it is also quite expensive, according to Saket Kumar, co-founder and CEO of the company and a seasoned venture financier. “The founders and the early workers who put in the labour and take the real risk are underpaid when equity is sold. The owners of a company’s value should be value creators, not capital providers.
Village Global, Entrepreneur First, Zayn Capital, and a variety of angel investors, including the founders of Wayflyer (Aidan Corbett), Comply Advantage (Charles Delingpole), Peakon (Phil Chambers), Choco, participated in Vitt’s $15 million pre-seed round, which was co-led by Better Tomorrow Ventures and SpeedInvest (Daniel Khachab).
According to Jake Gibson of Better Tomorrow Ventures, “Vitt adds a much-needed contribution to the early-stage finance landscape in Europe.” The increased digitization of the economy has led to a surge in smaller opportunity firms that use SaaS models but aren’t attractive to venture capitalists, in addition to producing a valuable product for a client who had previously had few options for obtaining funds. For these businesses, Vitt offers an excellent substitute that distinguishes itself from rivals and market leaders.