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Financing startup Pipe has fully pivoted its business to offer embedded Capital as a Service to B2B companies looking to lend to their end customers.

Why it matters: The new product will make it easier for vertical SaaS platforms and payment processors to offer revenue-based financing solutions.

Context: In the frothy days of 2021, Pipe raised more than $300 million and secured a $2 billion valuation to provide small businesses with revenue-based financing.

But as the market turned in 2022, Pipe's founding team stepped down, and former Square and Intuit exec Luke Voiles took over as CEO soon after.

Voiles hired a whole new C-suite with the intent of pivoting Pipe from a direct B2B lender to a B2B2B capital provider.

The latest: Now, about a year after Voiles took the helm, Pipe is officially launching its embedded solution and naming its first partners.

The partners include Priority, an integrated payments and banking platform; Infinicept, an embedded payments processor; and Boulevard, a vertical SaaS platform for salons and self-care businesses.

The company has also secured enough capital to deploy more than $1 billion over the next year.

How it works: Partners can embed Pipe's capital platform into their own product offerings through a series of APIs.

Pipe handles all the risk, compliance and underwriting work and shares about 25% of profits with partners.

"If you think about it, [our partners] can get 100% margin ... just straight to the bottom line. They end up with a profitable business out of the gate, that adds average revenue per customer pretty dramatically," Voiles says.

Between the lines: Voiles says the Capital as a Service offering will enable platforms that previously didn't have the necessary scale to offer financing.

"Based on my experience ... you need an 85- to 100-person team to do lending the right way," he says.

What's next: Pipe is working with two capital partners to fund its loans, but the company eventually wants to move to a balance sheet-light model where it's more of a market maker.

"Fundamentally, we want to get to a place where we ... deploy capital to the underlying small businesses, and then we can turn around and sell that risk to the capital markets," Voiles says.

Pipe commits to embedded Capital as a Service

Illustration of a pipe opened up with cash spewing out 

Fintech

Financing startup Pipe has fully pivoted its business to offer embedded Capital as a Service to B2B companies looking to lend to their end customers.Why it matters: The new product will make it easier for vertical SaaS platforms and payment processors to offer revenue-based financing solutions.

Pipe commits to embedded Capital as a Service

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