Customer engagement software provider Capillary Technologies has raised $45 million in a mix of equity and debt from a clutch of investors, including a consortium comprising Avataar Ventures and its limited partners, Pantheon, 57Stars and Unigestion.
Filter Capital also participated in the round, while Innoven Capital provided the debt.
Capillary Technologies’ founder and managing director Aneesh Reddy told ET that the platform is looking to use the infusion to fund acquisitions, enter markets such as Europe, double down on its loyalty management products, and serve more industries, including the banking, financial services and insurance (BFSI) sector.
The funding comes amid a slowdown in the flow of capital into the startup sector.
Capillary Technologies, founded in 2012, provides an end-to-end customer loyalty platform that offers a comprehensive view of consumers to businesses, allowing them to deliver a personalised, consistent experience to customers.
So far, the company has raised roughly $40 million as equity funding.
“We continue to break even, and will use the capital to drive acquisitions in the West, as we look to build the best company in the loyalty management space,” said Reddy. “We believe that acquisitions should be done with debt and have paid back the value of the acquisition in three years (through revenues) … we will continue to stick to the loyalty management space and not go wider than that.”
Taking the inorganic route, the company will also look to enter newer industries such as telcos and travel and hospitality, apart from BFSI, he said.
Currently, the company earns a third (33%) of its revenue from the US market, while Asia accounts for most of the rest.
Pre-pandemic, the company was largely focused on strengthening its playbook across India, Southeast Asia and West Asia, and began expanding into the US during the Covid-19 outbreak.
Capillary was looking to list on the Indian bourses and had even filed draft documents in December 2021 to raise Rs 850 crore through an initial public offering. Reddy indicated that those plans are on hold for now, and that the company may look at the listing plan again if market conditions improve.
The Warburg Pincus- and Sequoia Capital-backed software startup claims that it works with over 250 brands, including the Tatas, Puma, Shell, Domino’s, powering over 100 loyalty programmes for customers.
Capillary has been scouting for consolidation opportunities globally and has made almost five acquisitions till date, with the most recent being Texas-headquartered Brierley+Partners from Japan-based Nomura, last month. Brierley+Partners provides loyalty solutions to global brands.
The company’s previous acquisitions include
US-based customer experience firm Persuade, machine learning startup Ruaha Labs, digital commerce solutions provider MartJack, and ecommerce technology services provider Sellerworx.
Capillary has also invested in other
startups, including customer relationship management (CRM) software provider WebEngage.
According to Reddy, the company was Ebitda-positive, or operationally profitable, in FY23 and will look to generate free cash flows in FY24.
