Capillary Technologies receives $45 million in funding from Avataar Ventures and its LPs after postponing its IPO

Avataar Ventures and its limited partners (Pantheon, 57Stars, and Unigestion), Filter Capital, and Innoven Capital also participated in the funding round.

Capillary Technologies, a Bengaluru-based SaaS business, has raised $45 million in a Series D fundraising round led by Avataar Ventures and its limited partners (Pantheon, 57Stars, and Unigestion), Filter Capital, and Innoven Capital.

The business said in a statement that the new cash will be used to grow its global operations as well as for mergers and acquisitions. 

Capillary Technologies founder and MD Aneesh Reddy commented on the funding, saying, “…With this new funding, we are poised to expand our footprint in North America and Europe and pursue strategic acquisitions that align with our vision of becoming the preeminent loyalty company globally.”

The fundraising news comes nearly a month after the SaaS business paid an undisclosed sum for Texas-based Brierley+Partners. Brierley was Capillary Technologies’ fifth purchase. 

Previously, the company bought Persuade, SellerworX, MartJack, and the ML platform Ruaha Labs. Furthermore, it has minority shares in Exclusive and WebEngage.

The latest round of funding brings the startup’s total capital to more than $140 million. Its backers include notable investors such as Sequoia Capital, Warburg Pincus, and Avatar Capital. 

Capillary Technologies, founded in 2012, is an end-to-end customer loyalty platform that provides a perspective of consumers as well as unified, cross-channel tactics that create a real-time omnichannel, customized, and consistent experience for customers. 

Over 100 loyalty programs in 30 countries are powered by the SaaS startup. It collaborates with well-known brands such as Puma, Tata, Domino’s, and Mark & Spencer. 

Capillary Technologies was one of many Indian businesses planning to go public during the 2021 financing and equity market boom. In December 2021, it filed its draught red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO). 

According to the DRHP, the public offering would include a new issue of shares for INR 200 crore and a selling offer worth INR 650 crore.

Capillary Technologies, like many other Indian startups such as boAt, PharmEasy, Mamaearth, and ixigo, postponed its IPO as market conditions worsened. “The market isn’t conducive to an IPO.” “We have adequate capital and will wait for the market to improve,” Reddy told Inc42. 

The SaaS business is alleged to have postponed its planned IPO by 18 to 36 months. 

Capillary Technologies posted a standalone net loss of INR 22 Cr in FY22, compared to a net profit of INR 16.7 Cr in FY21. In FY22, its operating revenue increased 1.4X year on year to INR 163.3 Cr, while expenses increased 1.6X to INR 170.3 Cr.

The fundraising comes at a time when Indian businesses are feeling the effects of the present funding drought. However, in a sign of hope for the Indian startup ecosystem, startup funding increased 15% month on month to $1 Bn in May 2023.