What's Non-Dilutive Capital and How to Qualify | Miguel Fernandez, Capchase

Resources mentioned on this podcast

• Apply for non-dilutive capital today on Capchase's website.
• Visit Capchase analytics page to get a free business health check.

About this episode

In today’s episode, Melissa sits down for a (virtual) drink with Miguel Fernandez, Co-Founder and CEO of Capchase. Miguel is not your average founder, as his company raised nearly $2 billion at just 2 years old. Hear about what non-dilutive funding is, what you need to get funded and how it all works. After Miguel pours his Diet Coke and Melissa her Japanese coffee blend, Miguel shares a bit about himself. He grew up in Spain and studied mechanical engineering, and got a masters in energy engineering, but never actually worked as an engineer. It was working in Sales and SaaS that he was exposed to the opportunities and challenges of a SaaS business. The insights he gained led Miguel to found Capchase. 

Then, Miguel reveals the pros and cons of running a venture-backed, hyper-growth startup. On the negative side, he finds that raising money from VCs puts you on a trajectory where you have to shoot for the moon every time. This means the majority of those who don’t make it spend lots of time and energy investing in things with no return. On the positive side, more capital means more to be invested into your initiatives, receiving faster feedback loops and monetary growth. However, too much money can sometimes lead to making the wrong choices. 

The biggest challenges Miguel currently faces are scaling his team and undergoing the constant cycle of learning and unlearning. While Capchase did initially feel like a startup, their exponential growth shed light on the tendencies towards incrementalism and asking for permission. Incrementalism, or the tendency to release new products which are just slight improvements of the last, should be avoided at all costs. It is most important for a company to place the best people in areas where they have the potential to drive outside impact. Similarly, they allow their team to drive new things without always having to ask for permission. 

When Capchase first began, the first 20 people they spoke with were VC-backed companies. Now, they see that 50% are bootstrapped funders and the other 50% are VC-backed. As compared to VC companies, the bootstrapped companies really understood how much losing hurts after selling part of their business. Covid actually served as a catalyst for VCs, because suddenly everyone had access to loans and debt. Then, Miguel reveals his perspective on startups raising venture capital. He stresses the significance of feeling like you are the complete owner of your company’s destiny, which can be considered a different form of success. 

Next, Miguel highlights the kind of companies best suited for non-dilutive funding. This includes companies who have revenue and a grasp on their unique economics. The thing about non-dilutive funding, he reveals, is that it has to be returned. Understanding your cash flow and the returns you will be able to acquire in order to pay it back. Miguel has observed that bootstrapped founders tend to use this funding for everything and are generally much better at managing cash. On the other hand, VC backed companies are not as good at managing cash, but are good at deploying a lot of cash into certain things. Melissa elaborates on the idea that throwing too much money at things can actually lead to major mistakes in the long run.  

As the episode draws to a close, Miguel shares that there are actually very few requirements for companies looking to get funding from Capchase. Currently, they are only funding SaaS and hybrid SaaS companies, the area they best understand. It is typically Capchase’s recommendation for organizations to take smaller, more frequent withdrawals as opposed to larger withdrawals every now and then. Then, he reveals that what separates Capchase from other non-dilutive funding companies is that they chose from the very beginning to focus in only one specific area. Finally, he looks forward to the future of Capchase and shares final words of wisdom for bootstrapped founders tuning in. 

Timestamps

0:55 - Welcome to this episode, in which host Melissa interviews Miguel Fernandez. 
4:17 - Miguel introduces himself. 
9:21 - What is it like running a venture-backed, hyper-growth startup? 
13:10 - The biggest challenges Miguel faces in his work. 
16:13 - Who was Capchase initially designed for? 
20:25 - Miguel’s opinion on startups raising venture capital. 
23:10 - The kinds of companies best suited for non-dilutive funding. 
26:30 - What are organizations looking to do with capital? 
30:54 - The requirements for getting funding from Capchase. 
37:47 - Why can’t traditional banks do what Capchase does? 
39:17 - What sets Capchase apart from other non-dilutive funding companies? 
42:06 - Looking towards the future of Capchase. 
43:05 - Miguel’s final words of wisdom for bootstrap founders. 

About ProfitLed

Welcome to the ProfitLed podcast, where we discover proven growth strategies for bootstrapped entrepreneurs from the people who have done it before to help you accelerate your business! The ProfitLed podcast is brought to you by eWebinar, the leading automated webinar tool, and hosted by eWebinar Cofounder and CEO, Melissa Kwan.

ProfitLed is forum for the unsung heroes of SaaS, the founders and others behind the bootstrapped startups who are creative and resourceful enough to forge a pathway to success. Here’s where they get to share everything they learned along the way, so you can benefit from their expertise and find success in your ventures, too!

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Tags

eWebinar, webinar, SaaS, founders, funding, startups, capchase, co-founder, executives, ceo, non-dilutive funding, entrepreneurs, bootstrapped entrepreneurs, VS, scaling, leadership, hiring, venture capital, venture backing, entrepreneurship, capital class, bootstrapper, capital, equity, venture backed companies, investment, startups, team growth, pandemic, business growth, revenue, commercial success, capital insights, employee retention, growth financing