Element Finance: Financing SaaS organizations
John Gallagher, CEO, Element Finance

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Element Finance: Financing SaaS organizations

John Gallagher is an experienced business & finance specialist in the information technology and investment industry. He is the CEO of Element Finance, a boutique growth finance company that invests in and lends to SaaS and recurring revenue companies. In an interview, he speaks on an array of topics. Excerpts:

Conception of Element Finance

Element Finance got its start out of necessity. It was founded by Scaleworks – a group of seasoned SaaS operators who faced the challenge of accessing growth capital to grow their family of SaaS companies.

According to John, traditional banks weren’t an option as they didn’t value the SaaS recurring revenue model and wouldn’t lend to companies with no profit or tangible assets but who had amazing customer metrics and growth. Most other alternative lenders in the market at the time required equity warrants, board seats, and business covenants that did not make sense. “So, we raised our first lending fund so our companies could easily access growth finance without dilution. It went so well that we expanded our fund to help companies around the globe by providing growth finance. In three years, we have helped our customers grow ARR on average 38% each year and increased available capital to founders as they have grown.”

Fintech – Bolstering innovation and growth

From the rise of super-apps and the contactless revolution to the growth of digital banks, the landscape is vastly different than just a few years ago. Nevertheless, there is a crucial factor fintechs should keep in mind moving forward- human connection still matters. “There’s no doubt technology plays a much more significant role in our lives than it used to. It’s fair to expect everything from technology and automation to play an even more central part in our financial lives in the coming years. The speed and ease of transacting today is vastly a superior experience than a decade ago, this will continue.” While data is very important in our decisions about who to lend to, he adds that it’s not the only factor at play and businesses can’t lose sight of the human connection.

Helping SaaS founders overcome challenges

“We combine the passion and know-how to guide founders on their funding journey to build the right capital stack.” The capital stack represents different types of financing; each layer has its own risk and return potential that is crucial for founders when deciding which type of investment and level of risk is best for growing their business and preserving their interest. The company offers an upfront conversation on how debt can be part of this capital stack or when it would be the right time for it to be.

Fixed-Rate Term Loans and Revenue-based Finance are the two funding options offered by the company.

Leadership traits

Passion, patience, integrity and perseverance are the qualities John’s team attributes to him These things are the foundation to building solid relationships with team members and customers.

A word of advice for fintechs

Fintechs have raised a huge amount of money in the last few years. There will be a few big winners and many losers of capital in the race to get market traction. “The investors who have put in the money want big returns. Be careful about who and the timing of any investors you take in. If investors don’t get their returns, you certainly will not be seeing anything back for all your hard work.” He urges entrepreneurs to build relationships, work hard, and deliver on their promises.

Company: Element Finance

Website: www.elementfinance.com

Management: John Gallagher, CEO

Founded Year: 2018

Headquarters: San Antonio, Texas

Description: Element Finance is a boutique growth finance company that invests in and lends to SaaS and recurring revenue companies.

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