Pipe: Business-Funding Fit

This is not a “VC is bad” piece.

Pipe needs to simultaneously attract companies willing to sell their recurring revenue and investors willing to buy it.

That’s it. In less time than it takes to set up a Slack group, your company can raise as much money as it might in a months-long, dilutive venture capital fundraising process or in an equally painful venture debt raise that leaves you with liens on your business and warrants outstanding.

Pipe is in the business of creating Business-Funding Fit. Its skills -- pulling in companies’ financial data via APIs, assigning ratings based on that data, attracting investors, providing liquidity, and managing seamless ongoing financial transactions -- will be extensible to many more subscription-based business models over time.

What Danco and Hsu both realized in two steps is:

This is Pipe’s flywheel and network effect: more bids → better prices → more companies → more bids.

Pipe solves the problem that both Hsu and Danco alluded to: right now, the way that startups fund themselves doesn’t match their business models or maturity. Product-Market Fit gets most of the headlines. Product-Founder Fit is an up-and-comer. But Business-Funding Fit -- funding each business with the right type of capital -- is an equally importa... See more

Based on the fact that most founders are builders, not CFOs, it’s a fair assumption that most founders aren’t naturally skilled capital allocators and so aren’t aware of all of the alternative methods large companies utilize to finance their businesses. What I see happening in B2B fintech is a sort of ‘consumerization’ of these previously unknown a... See more

Pipe is building an entirely new asset class based on recurring revenue contracts. It’s not equity and it’s not a loan. Pipe lets businesses raise money today by selling their monthly or quarterly subscription cash flows directly through its platform.