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€12M Debt Financing to Scale a SaaS Powerhouse

Byphilipp

Client Background

A fast-growing SaaS scale-up had built a category-defining software platform with a proven product-market fit and a rapidly growing customer base. Expansion opportunities were clear: new international markets, bigger enterprise deals, and an aggressive sales push.

But scaling SaaS is capital-intensive. Customer acquisition costs (CAC) are front-loaded, while revenue from subscriptions trickles in over time. The company needed €12M in debt financing to pre-fund sales and marketing expansion—without giving up equity at a critical valuation inflection point.

Challenge / Pain Point

  • Revenue Timing Mismatch – While ARR was growing fast, new customer acquisition required significant upfront investment before revenue was realized.
  • Avoiding Equity Dilution – With strong valuation growth ahead, raising equity at this stage would unnecessarily dilute existing shareholders.
  • Lender Skepticism on SaaS Debt – Traditional lenders struggled to understand the long-term cash flow model of a high-growth SaaS business.
  • International Expansion Risks – Scaling across multiple markets added operational and currency complexities, making lenders hesitant.

Solution / Approach

1. Finding SaaS-Savvy Lenders

  • TULA sourced debt providers specializing in recurring revenue models, avoiding traditional banks that focus on hard assets and short-term profitability.
  • We targeted lenders who understood SaaS unit economics, valuing the company’s high gross margins and predictable revenue streams.

2. Structuring Debt to Match Growth

Instead of a fixed repayment schedule, TULA structured a revenue-based debt facility, ensuring flexibility:

  • First tranche: Used to scale outbound sales teams and marketing efforts.
  • Second tranche: Released upon demonstrated ARR growth, ensuring debt remained efficient.
  • Third tranche: Allocated for international expansion, reducing financial strain while entering new markets.

3. De-Risking the Lending Case

  • We demonstrated historical ARR growth trends, showing a clear path to profitability even with increased burn.
  • We positioned expansion as a measured strategic move, rather than a risky cash burn exercise.
  • By leveraging contracted ARR as collateral, we made the lending profile significantly more attractive.

Outcome / Results

  • Secured €12M in non-dilutive debt financing, fully aligned with the company’s growth milestones.
  • Allowed the company to scale its sales team aggressively without affecting short-term cash flow.
  • Enabled entry into three new international markets, accelerating revenue growth without the constraints of equity fundraising.

Key Takeaways

  • SaaS growth debt must be structured around ARR scaling, not fixed repayment models.
  • Equity isn’t always the best solution—with the right lenders, SaaS companies can finance growth while retaining ownership.
  • Strategic debt can be a growth accelerator, allowing companies to invest ahead of revenue without liquidity risk.

Scaling your SaaS business?

TULA structures smart debt solutions that fuel ARR growth without dilution.

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