Exclusive: Fintech Offers Startups Alternative To Venture Debt With A New Model To Finance Customer Acquisition Costs

figure — technology companies routinely spend heavily to acquire customers who may not generate enough revenue to cover those costs for months or even years. A new fintech company, Skalar, wants to finance that gap without taking equity or requiring startups to repay the money on a fixed schedule.

The New York-based company publicly launched Thursday with an undisclosed seed round led by São Paulo-based venture firm Monashees and a debt financing partnership with General Catalyst’s Customer Value Fund. Since its January inception, Skalar has committed to finance more than $125 million in sales and marketing spending across seven technology companies over the next 12 months. Financing tied to customer revenue Sebastian Cardenas and Daniel Castrillon, co-founders and CEOs of Skalar. (Courtesy photo) Skalar’s model is fairly straightforward, though somewhat unusual. The company provides startups with capital to fund sales and marketing initiatives. The startups then pay it back out of the revenue generated by the customers acquired with that capital. If those customers generate less revenue than expected, Skalar says it absorbs the shortfall rather than requiring the company to repay the full original amount. Skalar’s current deals generally call for it to collect about 1.1x the amount provided. For example, if a company spends $10 to acquire a customer and expects that customer to pay $1 per month for 30 months, Skalar provides the initial $10 and collects the first $11 that customer generates. Once Skalar reaches that repayment limit, the company can keep the remaining revenue. But if the customer cancels after eight months, Skalar collects only $8 and writes off the balance, according to co-founder and CEO Sebastián Cárdenas. “We only get repaid as they get repaid,” Cárdenas told Crunchbase News. Notably, the startup doesn’t have to pay the capital back by a certain date. Instead, repayment is tied to revenue from the customers acquired with the financing, rather than a fixed schedule. For example, a company that recoups its acquisition costs in one month repays the loan in one month, while one that takes 12 months repays it over one year.