Efficient Capital Labs (ECL) has successfully raised $11 million in Series A funding aimed at bolstering its cross-border revenue-based financing solutions for B2B software-as-a-service (SaaS) companies operating between South Asia and the U.S.
Expanding Horizons
With operations currently in the United States and India, ECL plans to utilize this new capital to venture into Singapore and other Southeast Asian markets. This strategic expansion is set to address the underfunding issue faced by cross-border companies, which are often assessed as isolated entities rather than integrated global operations. As explained by Kaustav Das, co-founder and CEO of ECL, this unique approach allows ECL to provide a comprehensive risk assessment by evaluating a business's revenue across all geographic areas.
Unique Financing Approach
ECL positions itself as a pioneer in revenue-based financing, a method where companies receive funding based on their revenue streams instead of traditional creditworthiness. This is particularly beneficial for businesses with consistent yet fluctuating income, providing them flexibility that traditional loans may not offer.
Company Growth and Strategy
Founded in 2022 by Kaustav Das and Manish Arora, ECL has grown substantially, now employing 25 people across the U.S. and Canada. The firm plans to increase its workforce by 30 to 35 employees by the year's end, with roles including a chief revenue officer or chief marketing officer, a head of business development, and additional engineers.
ECL's impressive growth can be attributed to a significant increase in its accounts receivable, which saw a sixfold rise from 2022 to 2023, doubling again in the first half of 2024. The company cites its low default rates and a strong customer return rate, with 70% of clients seeking additional financing, as key factors in its success.
A Shift in Financing Trends
The popularity of revenue-based financing is on the rise, especially in developing countries like India. According to Arora, the past few years have seen a shift due to declining availability of venture capital (VC) and challenges in the venture debt markets, prompting businesses to explore alternative financing options.
This funding round follows ECL's previous success, having closed a $7 million round just 13 months ago, which at that time supported 43 SaaS clients and facilitated over $13 million in loans.
