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What is Pipe?

Pipe is a two-sided marketplace connecting companies that have monthly or quarterly recurring revenue with investors who bid to purchase these revenues for their annual value, upfront. It’s the new way to finance your growth without dilution or debt.

How does Pipe work?

Pipe syncs with your banking, payment processing and accounting systems to underwrite your business instantly. Once approved, you will have access to the Pipe Trading Platform where you will see real-time bids for the full annual value of your subscriptions. Our vetted investors make offers to buy your monthly and quarterly paid subscriptions at a small discount to their annual value. The bid price for your subscriptions depends on the size of your business and trading history, but it’s always significantly less than the annual discounts most companies offer their customers to try and incentivize them to pay upfront. With Pipe, it’s as if all of your monthly and quarterly customers paid you upfront!

Do I need to communicate to my customers that we’re using Pipe?

No. Pipe doesn’t disrupt the billing workflow or interfere with customer relationships. You continue to collect payments from your customers as normal, then they’re automatically sent to Pipe each month and we pass them onto the investor that purchased your subscriptions. Your customers don’t even know we exist.

Is Pipe right for my company?

Pipe is built for SaaS companies who have proven product-market fit and predictable customer retention metrics. The best way to see if Pipe is right for your business is to go through our simple sign up process, which takes just a few minutes. There’s no cost to join Pipe and no obligation to ever trade.

Is Pipe available to companies based outside the US?

Yes, we work with foreign companies with a US subsidiary, and we’re launching in a number of international markets in the near future. The best way to see if your company can use Pipe is to go through our sign up process – if you’re not eligible today, we’ll notify you as soon as we launch in your country. If you’re a foriegn company that would like to use Pipe today, we can help you set up a US subsidiary.

Does it cost anything to sign up?

No, there is absolute zero cost to join Pipe and no obligation to ever trade. Sign up takes a couple of minutes and you can get approved to trade within hours.

How is the payout value for my subscriptions determined?

The price that investors are willing to buy your recurring revenue for ranges based on the health and size of your business as well as your trading history on the Pipe platform. However, the price is significantly higher than the discounted pricing you may be offering on annual pre-paid subscriptions to your customers. Additionally, with Pipe you maintain 100% of your ACV, a very important metric. The easiest way to get your live bid price is to go through our seamless, commitment-free sign up and we’ll be able to show you the best bids for your subscriptions.

How is my trading limit determined?

Each company we work with is unique, so trading limits vary from business to business. Once you start trading on the Pipe platform, we evaluate your account on a weekly basis so your limit scales with your business. Building up trading history is key to increasing your limit over time - limits can range from $25,000 to $100M.

Why do I need to connect my accounts before accessing the platform?

Linking your accounts is how we verify your eligibility to use the Pipe platform. By syncing with your banking, payment processing and accounting systems, we’re able to underwrite your business and provide you with your initial bid price and trading limit. It’s also how we make payments to you once you’re onboarded.

What should I do if I’m having trouble connecting my accounts?

We’re here to help - there’s always a fix! Please contact us to get the help you need.

How long is the process, from signup to having the money in my account?

After your accounts are synced, our approval process typically takes a few hours. In some instances, approval can take up to 48 hours. Once approved, log in to your dashboard, view your available subscriptions, and select those you want to trade for upfront cash. We provide instant offers from investors on our platform, you approve the transaction, and the bank transfer is instantaneous.

What do you look for during the underwriting process?

In order to underwrite your business, we look for a history of solid financial performance along with predictable cash flow and customer metrics (e.g. churn, revenue retention). That’s why we sync with your systems – we need to have a holistic view of your business in order to underwrite it. We work with companies of all sizes, from $100k to $100M+ ARR.

Is there a personal guarantee?

No, Pipe does not require any personal guarantees.

Is Pipe a loan or merchant cash advance?

No, Pipe is not a loan or a merchant cash advance. For the first time ever, your subscriptions are fully tradable with investors as assets. That means no lien on your business, no lengthy approval process and no hassle.

How often can I access funds from new or additional subscriptions?

You can sell as many subscriptions as often as you like within the total trading limit provided to you. This limit is automatically reassessed at least every 30 days and can increase based on your business’s performance and trading history with Pipe.

What happens if a subscription that I’ve sold churns?

If a subscriber churns before the 12 month period that you traded, you have two options. You can rebate the capital you received upfront on a prorated basis for the remaining period with no penalty or fees, or you can simply select a new subscription of equal or greater value to cover the rebate of the churned account. You can see the exact payment schedule in real-time in your Pipe dashboard.

How does the payment and withdrawal process work?

Pipe automatically deposits the cash from investors into your account the same business day that you make the trade. Then, once per month Pipe will automatically withdraw the payments that you have collected from your customers for the subscriptions you’ve traded and distribute the funds to the investors you traded with. We will notify you through the Pipe platform and by email for each transaction.

Can I receive more than 12 months of value for a subscription?

Great question – and we’d love to chat about this with you. If you have multi-year contracts, please click here to get in touch.

How do I report the cash flow received from Pipe in company financial statements?

As always, you should seek advice from your professional financial or tax advisors. Many Pipe customers, depending on their specific accounting policy and the time-frame of the sold subscriptions, either:

  • Book the cash received against existing Accounts Receivables
  • Book the cash received against Deferred Revenue/Pre-payments

The cash received upfront through Pipe does not accelerate revenue recognition. Again, please consult your financial or tax advisor in order to make an informed decision for your business.

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