Capital Stack Finance – Capital Stack Solutions

Building the Right Capital Stack for Your SaaS Business

There are thousands of SaaS founders working in hundreds of different ways to grow their business. Most are passionate about their idea, product, or solution and have ambitious goals for the future.

However, many struggle to understand financing options available to acquire funding to reach their goals. Others are challenged with knowing how to build a balanced capital stack—the business's financial structure—to ensure growth while retaining the most profitable percentage of ownership.

At Element SaaS Finance, we combine the passion and know-how to guide you on your SaaS growth funding journey to build the right capital stack.

The capital stack represents different types of financing; each layer has its own risk and return potential that is crucial for founders when deciding which type of investment and level of risk is best for growing their business and preserving their interest.

Cost of Capital

High

Low

Grants & Traditional Bank Debt

Seed Funds & Accelerators

Venture Debt & Growth Finance

Strategic Investors

Private Equity

Venture Capital

Explore the Capital Stack

Grants

A business grant is money awarded to businesses undertaking innovation or have the prospect of growth, resulting in employment creation. Government agencies usually issue them, and unlike loans, grants don't have to be paid off.

Traditional Bank Debt

Commercial banks give loans to businesses that have advanced to a mature stage in revenue, customers, product, and cash flow. Banks can support these more stable businesses due to the low risk involved in the loans and the high confidence that the loan will be paid back.

Seed Funds

Seed capital is provided by private investors – usually in exchange for an equity stake in the company. The type of investor will include founder personal investment, friends and family, angels, or investment funds set up specifically for an early-stage venture.

Accelerators

Investors and business communities set up accelerators to help early-stage businesses access both services, a network of advisors, and early-stage investors. Some accelerators have specific funds that will invest in high potential participants

Venture Debt

Venture debt is a loan product offered mostly by non-bank lenders. These types of loans are for growing companies where there is more risk than a traditional bank loan would work. They can involve a higher interest rate, different fees, and maybe equity warrants to allow the lender to benefit from the upside in highly successful companies.

Growth Finance

In recent years more options around Growth Finance have become available. Revenue-based finance provides an option for SaaS founders where the loan is repaid with a percentage of monthly revenue, with a set cost. SaaS companies can leverage recurring revenue venture debt to grow their business without warrants, prepayment penalties, personal guarantees, or equity dilution.

Strategic Investors

Strategic investors will provide different types of equity and debt solutions to businesses that correlate to their own business and see an overlap in services, customers, or products. Strategic investors sometimes ask for a first right of refusal if the company owners try and sell the business.

Private Equity

Private equity investors buy partial or complete ownership stakes in mature businesses, but where there is an opportunity to expand the business, make it more efficient or a strategy that the current owners do not want to or cannot take. These investors put in their own management teams and board directors and often provide advisory support and consultancy.

Venture Capital

Venture capital is a common element of the capital stack for early-stage businesses that need large amounts of money to get going and plans on building a complex product or is targeting a broad customer base. However, equity financing involves selling a portion of a company's equity in return for capital, resulting in dilution and loss of control of different elements and directions.

Featured Founders

“The team at Element SaaS Finance were great to work with - They helped us get the funds needed to finance a bolt-on acquisition, increasing our number of products, customers, and revenue.”

Sameer Kamat

CEO

Filestack

“From our first meeting, it was clear that John and his team just get it. Element SaaS Finance knows what SaaS companies are looking for and what our unique challenges are. We wanted smart, quick, and efficient directions, and we got it. We’re looking forward to continuing our partnership.”

Bernie Schiemer

CEO

Vincere

"Element SaaS Finance has been a key part of the growth and success that we've been able to achieve at Karbon. John and the Element SaaS Finance team understand how SaaS companies like us operate, they don't try and over-complicate things, and they allow us to focus on the most important stuff without giving up any control."

Stuart McLeod

CEO & Co-founder

Karbon

"Element SaaS Finance has been a great partner to AG, investing time and effort to understand our business and deliver unique and innovative financing solutions to help us fund rapid growth. They are responsive, transparent, and collaborative in everything they do. John and his team have been extremely supportive and have provided tremendous contributions as we continue to scale our business."

Blake Nolan

CEO

Athletic Greens

"Element SaaS Finance has been a true partner in our growth. They recognized the potential of our solutions and helped us secure funding that is strategically tied to our business model and allowed us to scale."

Omri Friedel

Head of Finance

List Reports