[WATCH] SaaSBOOMi launches debt fund to support entrepreneurs during the coronavirus

SaaS entrepreneurs have some relief coming their way to tide them over through this coronavirus pandemic. SaaSBOOMi, a platform to celebrate the growth of the Indian and Asian SaaS communities, has announced a partnership with Indifi, an NBFC that supports small businesses, to help entrepreneurs get working capital financing during the pandemic and pull through the slowing economy.

The corpus of this debt funding initiative will be Rs 40 crore to Rs 50 crore, and is available to those who have an annual revenue run rate of $250,000 and do not make money from IT services.

SaaS startups can apply for this funding line on the SaaSBOOMi website, where an expert group will curate the applications and run it past the NBFC to fund the startup.

By the way, the loan is collateral-free.

This initiative was set up by SaaSBOOMi in just 10 days.

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Speaking with YourStory, Vinod Muthukrishnan, Co-founder of Cloud Cherry; Pallav Nadhani, Co-founder of FusionCharts; and Manav Garg, Co-founder of Eka Software unveiled the need for such a fund during the coronavirus pandemic.

The trio came together and presented the idea to the SaaSBOOMi committee members, who recognised the need for such a fund and mentorship.

"SaaS companies have subscription-based cash flows. But, SaaS is a relatively new business and most of the founders are young and have never seen a pandemic. A few months ago, the financial discipline was focused on growth and companies spent fifty percent on marketing. But, now times have changed," says Manav. 

He adds that the biggest asset that SaaS entrepreneurs have is the cash coming to their business. While companies use this cash to manage austerity, they can run their business with the debt fund.

"SaaS has predictable recurring revenue and there is certainty in the revenue stream. Depending on where you are in your journey, we look at customers, products, and the contribution margin. Then, we look at what kind of runway you need to survive on your own. The NBFC will estimate the interest rate and the duration of the loan," says Pallav of FusionCharts, which is now part of Idera.

The processing of the loan will be done in less than a fortnight.

"You have to realise that none of us have faced such a crisis. It is a leap of faith that we are taking and it is important for the SaaS community to come out of this phase. Those that survive will be large businesses in a decade," says Vinod of CloudCherry, which was acquired by Cisco recently.