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🦄 Unicorner Startup of the Week: Pipe
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✍️ Notes From The Editors
Hope you're having a great start to the week! If you missed our Newsletter 101 workshop with Ladder, you can check out the full recording here. If there were questions you had for us, feel free to reply to this email and we'll get back to you as soon as we can!
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Turn subscriptions into upfront cash
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Pipe is a platform that allows companies with recurring revenue (i.e. subscription-based business models) to trade subscriptions for upfront cash. Investors purchase annual contracts, buying a user’s subscription for a whole year, for a small discount on the dollar. This means founders have access to a whole year’s worth of subscription revenue upfront, avoiding the need to otherwise increase debt or give up stock. This new marketplace where recurring revenue is an asset allows for a new solution in capital raising and investing.
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💰 Business Model
This platform to trade recurring revenue contracts creates a marketplace of subscription-based businesses and institutional investors. The recurring revenue becomes an annual contract that can be bought and sold. Pipe takes a certain fee for organizing each transaction. Trading limits range from $50k to $100 million depending on the size of the company.
📈 Traction and Fundraising
👫 Founder(s)
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Harry Hurst, Co-CEO: Previously Founder @ Skurt (Acquired by Fair.com), studied CS in high school (graduated at 12 years old)
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Josh Mangel, Co-CEO: Previously Head of Product @ Fair.com, CEO @ Skurt (Acquired by Fair.com), Co-Founder @ Beatdeck
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🔮 Our Analysis
By creating a marketplace to trade MRR and ARR as assets, Pipe is uniquely opening up new opportunities surrounding how to raise money. A major sacrifice that startups and early-stage ventures make is issuing stock or taking on debt in order to raise money, and Pipe wants to change this. By bypassing traditional methods of raising capital, Pipe creates more flexibility when deciding how to grow a company. This uniquely benefits scaling companies. However, in the future, Pipe’s team told us they want to move the scope of the platform beyond SaaS and “enable any company with predictability in its revenue to access capital to grow on their own terms.” Since there are many companies with a recurring revenue business model in various industries, Pipe could potentially be used by many more different kinds of companies looking to scale. In fact, Pipe’s team said their five-year vision is to be a staple in every company’s capital stack. Another possibility is to allow individuals to directly invest in these contracts and create an even larger marketplace. Overall, Pipe is disrupting an industry in its current state, and it has significant potential to expand into other industries and markets.
📚 Further Reading
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Made with 💜 by the Unicorner Team 🦄
Comments? Just reply to this email!
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🎁 Bonus Content!
If you'd like to read a comprehensive analysis on Pipe, check out fellow newsletter writer Packy McCormick's Not Boring piece from October 2020. |
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