😅 Does this count as giving away money?!? This email should NOT be free! 😅
The opportunity in front of this company is INSANE!!!
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Today we’re going to talk about
Facts:
Started in September 2019, Pipe gives it’s clients control over their cash flow. It does this by allowing them to get access to the full annual value of their subscriptions, upfront.
They raised $6M in Seed funding
They have only 9 employees
Why I like:
Fintech is super hot right now. There were a bunch of notable exits this year. Honey was acquired by Paypal for $5B in January and below are a few others that happened in February:
Source: Trends.co
Robert Smith, you know the guy that paid off the student loans of the ENTIRE 2019 graduating class of Morehouse College, once said that "Software contracts are better than first-lien debt," Smith says. "You realize a company will not pay the interest payment on their first lien until after they pay their software maintenance or subscription fee.” Essentially what Smith is saying here is that software maintenance contacts are amazing assets to lend against and that is exactly what Pipe is doing!
Start ups are beginning to realize that equity funding (aka taking money from VC’s) isn’t always the best option.
When WeWork tried to go public it was revealed that the company was completely propped up by venture capital investors. This made more founders and VC’s start to rethink the growth over everything model and realize profit is an important part of building a business.
As this tide continues to turn more companies are also beginning to realize, if you can turn a profit selling a portion of your company begins to make less sense.
Enter venture debt.
“A form of debt financing for venture equity-backed companies that lack the assets or cash flow for traditional debt financing, or that want greater flexibility.”
Source: Tech Crunch
This form of funding companies is growing rapidly as shown above but it does have its downside. One in particular being that is gives “the creditor of the loan the option to purchase equity from the indebted startup.”
This almost defeats the whole purpose of not selling your equity to VC for money.
This is where Pipe changes the game. They offer financing backed by the reoccurring revenue produced by the software companies they work with.
Like Robert Smith said “a company will not pay the interest payment on their first lien until after they pay their software maintenance or subscription fee”.
Pipe is offering an improvement to the current model of financing for software companies by speeding up the process.
Today, companies go to specialized banks like and VC’s for debt financing. This process takes a at least a day and in most cases a few days. With Pipe companies can have additional financing in as little as a few hours.
Lastly, this is already working.
Fastpay does this for media companies. As of 2017, they had originated over $2B in financing for companies.
Software is an even larger market. One would imagine Pipe has a chance to do a lot more than that!
The founders are experience and have already had one successful exit.
Harry Hurst and Josh Mangel are the Co-CEOs of Pipe. They were also both Co-CEOs of Skurt.
At Skurt, Harry and Josh raised $11.3M and sold the company to Fair.com after operating the business for four years.
Lets Talk Jobs
Pipe has not put jobs up on their website yet. The only thing I have seen so far is
That said, I’m a big believer in going right to the source.
Harry Hurst - Co-Founder and Co-CEO
Josh Mangel - Co-Founder and Co-CEO
Zain Allarakhia - Co-Founder and CTO
If I were trying to work there, I would email one them or all of them. My goal would be to try to start a conversation. That can start with an email exchange, it could be a phone call or an in person meeting but the key is to separate yourself from the competition.
Good luck out there!