Investors loan us money at a set interest rate of 12%. We lend that money out to SaaS founders at a higher rate.

This means we’re usually not a fit for founders who have raised significant venture capital because you can go to a bank and get a cheaper rate in the 5-9% range with 0.1-0.5% warrant coverage and covenants.

We make money by loaning money at a higher interest rate than what we raise at. The same way that a local bank takes consumer deposits at 0.1% interest rates, and then loans them out to homebuyers through mortgages with a 4% rate.

We make money the same way (a spread) but we only lend to SaaS founders and don’t take your house if you default (no personal guarauntees).

No origination fees. No due diligence fees.

At a high-level, each company starts with a perfect score of 1,000. As the data gets analyzed, your score gets dinged for “poor” metrics and rewarded for great metrics. We track hundreds of data points but here’s a simple version on how we weight your churn.

If, in the first 30 days you churn 40% of your customers, the # of points we allocate to churn score (lets say 120/1000) gets “dinged” by 0.2. You score a 24/120 on churn so your max credit score is now 904 (1000-120+24).

We tweak this algorithm weekly based on patterns we see across 1800 SaaS CEO’s sharing bank and customer data (Read only). These companies do $20 billion in ARR. We believe this is the largest representative cohort of private SaaS companies of any tool today.

As your SaaS credit score improves, you unlock the ability to take more capital (up to 1x ARR) from Founderpath at cheaper rates.

We believe that over time our credit score will allow us to get money to founders at cheaper and cheaper rates as we better understand SaaS risk.

We rely on read only API access from tools founders use for critical business functions like Stripe. Other than generating a credit score, Founderpath doesn’t access or otherwise use your data.