Debt financing which is fast, simple and tuned to the company’s needs, as an alternative source of working capital is gradually receiving wide acceptability, especially among growth-stage startups. The relevance of such alternative funding sources is now far more pertinent considering the so-called funding winter wherein chances of startups scoring equity capital are slim. In recent years, several revenue-centered financing platforms have emerged with Getvantage, Velocity, and Klub being some of the notable names.
Gurugram-based Recur Club has also emerged as a notable player in the space with an allocation of Rs 1,000 crore across 500 companies in 2023. The company is now looking to expand its reach in the startup ecosystem. The roadmap includes onboarding a higher number of startups as well as more investment deployment.
To better understand Recur Club’s business, growth and projections, Entrackr caught up with its Co-Founder and CEO Eklavya Gupta.
Recur has backed startups like Ustraa, Rage Coffee, Moveinsync, Keka HR, Xoxodays, and others. In July last year, the platform launched a $10 million fund to back startups actively working towards a greener and more sustainable future.
Recur Club isn’t looking to raise any fresh capital at the moment. “We are well capitalized and not looking to raise any money in the near future. Our priority is to onboard 500 – 700 startups this year and deploy Rs 2,000 crore through its platform,” Gupta said.
Gupta disclosed that nearly half of the company’s deals are in SaaS and tech sectors, whereas the remaining is deployed towards commerce and logistics. The investment pattern is pretty similar to other revenue-based financing platforms’.
Recur Club offers credit in the range of Rs 20 lakh to Rs 35 crore which yields an IRR (internal rate of return) of anywhere between 15% and 19%.
Recur Club connects startups with over 50 prominent lenders, including Tata Capital, HSBC, Aditya Birla Capital, INCRED, Ugro Capital, and various other NBFCs, banks, and institutional capital providers.
According to Gupta, Recur Club assesses leads on three core premises: average revenue run rate (ARR) of at least Rs 1 crore, six months runway and positive revenue growth. Recur Club makes money by charging a small percentage from both ends: borrowers and lenders. “Depending on the type of investors and companies, we charge 0.5% to 3%,” added Gupta.