In an investment round, Capillary Technologies, an Indian SaaS business that provides solutions for customer engagement and loyalty management, raised $45 million. The company intends to use the funds to grow internationally and increase its reach through mergers and acquisitions. The cash comes in at a critical point in the current market slump, when entrepreneurs, especially those in the late stage, are struggling to raise money.
Avataar Ventures, along with its limited partners Pantheon, 57Stars, and Unigestion, led the Series D fundraising round for Capillary. Filter Capital and Innoven Capital also took part in it. The investment includes between $5 and $7 million in debt and $40 million in equity. With the most recent cash infusion, the business has now raised close to $150 million in total.
Capillary Technologies, which was established in 2012, initially concentrated on the retail sector in India and Southeast Asia. It has expanded its offerings in recent years and entered other markets, including the Middle East, South Africa, and, as of early 2021, the United States.
With its emphasis on gamification to increase client loyalty, Capillary is carving itself a distinctive position in the market. The company claims that it has been successful in implementing this strategy throughout the commerce, retail, aviation, and hospitality industries.
A number of clients have been drawn to the Bengaluru-based startup’s range of technologically advanced, cloud-native solutions. It has already worked with more than 250 brands in 30 different countries to fuel more than 100 loyalty programs. Domino’s, Tata Group, Puma, Shell, Petron, and Marks & Spencer are some of the company’s well-known clientele. More than 1 billion people use Capillary’s technology every year, which handles more than 5 billion transactions.
The majority of our rivals both domestically and abroad have constructed their businesses in a similar manner to a services firm, where clients want something, and you build it. Aneesh Reddy, founder and managing director of Capillary Technologies, stated in an interview that we have instead adopted a very product-focused approach to it.
Capillary’s business has increased by 3.5 times in less than two years since it arrived in the United States and acquired the customer experience startup Persuade, the company claimed without providing exact figures. Additionally, it claims that more than a third of its current revenues come from the U.S.
The startup has acquired five companies in the United States, with the most recent being the Nomura acquisition of Texas-based loyalty solutions business Brierley in April of this year. It has been able to offer solutions to clients who operate in more diverse industries because of these acquisitions.
According to Reddy, as part of its expansion strategy, Capillary is looking to use the new capital to leverage its footprint in the U.S. and Europe by actively pursuing strategic acquisitions.
The majority of the funds will be utilized for acquisitions because the main business is already profitable and expanding, according to him. As you might expect, it is a fantastic moment to buy if you have the cash.
Capillary Technologies submitted its draught papers to go public in India at the end of 2021. However, the firm has postponed that strategy because of the continued market slump. According to Reddy, the concept of doing an initial public offering (IPO) in India is still being discussed, and he may do so within the next three years.
“Capillary has a positive aspect in that it is profitable. We have a tonne of extra cash on the balance sheet as a result of this fundraising. So, it’s not like I’m listing with a gun to my head, he remarked.
Apart from India and the U.S., Capillary employs approximately 750 employees, including 200 contractors, and has operations in Dubai, Indonesia, Malaysia, and Singapore. Among its current supporters are Sequoia Capital and Warburg Pincus.
In a statement, Mohan Kumar, Managing Partner at Avataar Ventures, said that observing Capillary’s business transformation over the past four years has been “truly remarkable.”
“It has been nothing short of spectacular to strategically diversify from Asia into the US and Europe, spanning multiple consumer verticals beyond retail. Capillary has risen to the top of the loyalty software market as a result of this move, which has been acknowledged by outside sources including the Forrester Wave. In light of the increased addressable market and the enormous potential that lies ahead, Avataar is steadfastly devoted to helping Capillary in its efforts to dominate the world market.
