Capillary Technologies Secures $45 Million Funding for Global Expansion and Acquisitions
- ByStartupStory | June 1, 2023
Capillary Technologies, an Indian SaaS startup specializing in loyalty management and customer engagement solutions, secures $45 million in funding to fuel its global expansion and strengthen market presence via mergers and acquisitions. The funding injection comes at a critical juncture amid the prevailing market slowdown, addressing the capital crunch faced by late-stage startups.
Capillary’s Series D funding round is spearheaded by Avataar Ventures and its LPs, including Pantheon, 57Stars, and Unigestion. Notable participation in the round comes from Filter Capital and Innoven Capital. The funding consists of approximately $40 million in equity and an additional $5-$7 million in debt. This recent influx of capital brings the startup’s total raised funds to nearly $150 million.
Established in 2012, Capillary Technologies started its operations with a primary focus on the retail sector in India and Southeast Asia. Over time, the company has expanded its range of solutions and successfully entered new markets such as the Middle East, South Africa, and, as of early 2021, the United States. Capillary’s unique positioning in the market revolves around leveraging gamification to enhance customer loyalty, a strategic approach that has proven successful across various industries including commerce, retail, aviation, and hospitality.
Capillary Technologies, headquartered in Bengaluru, has garnered a substantial client base with its comprehensive suite of technology-enabled, cloud-native solutions. The startup has successfully partnered with over 250 brands across 30 countries, driving more than 100 loyalty programs. Among its notable clients are industry leaders such as Domino’s, Tata Group, Puma, Shell, Petron, and Marks & Spencer. Capillary’s cutting-edge technology has a vast reach, touching the lives of over a billion customers and facilitating over 5 billion transactions on an annual basis.
“The way most of our competitors in the U.S. and elsewhere have built in as like a services business where customers ask you something, and you build it. On the other hand, we have taken a very product view to it,” Capillary Technologies founder and managing director Aneesh Reddy said in an interview.
Capillary Technologies has experienced significant growth since entering the U.S. market and acquiring Persuade, a customer experience startup, just over two years ago. While specific numbers were not disclosed, the startup stated that its business has grown by 3.5 times during this period. Furthermore, the U.S. market now contributes more than one-third of Capillary’s total revenues. Through a series of five acquisitions in the U.S., including the recent purchase of Brierley, a loyalty solutions provider based in Texas, Capillary has expanded its offerings to clients across various industries. With the infusion of fresh funding, the startup aims to further expand its presence in the U.S. and Europe by actively pursuing strategic acquisitions as part of its growth strategy.
“The core business is profitable and growing by itself, so most of the funding is going to be used for acquisitions,” he said. “As you would guess, if you have the money, this is a great time to buy.”
Capillary Technologies had initially filed its draft papers for an IPO in India towards the end of 2021. However, the startup has decided to postpone this plan due to the prevailing market slowdown. Although the idea of going public in India is still under consideration, Capillary’s CEO, Reddy, has stated that the company may execute the IPO within the next three years.
“The good piece of Capillary is it’s profitable. With this fundraise, we have a lot of excess cash also on the balance sheet. So, it’s not like I have a gun to my head to list,” he said.
“It has been truly remarkable witnessing Capillary’s business transformation over the past four years,” said Mohan Kumar, Managing Partner at Avataar Ventures, in a statement.
“The strategic decision to diversify from Asia into the US and Europe, encompassing various consumer verticals beyond retail, has been nothing short of impressive. This move has catapulted Capillary into a leadership position in Loyalty software and this has been recognized by external mentions like the Forrester Wave. Given the expanded addressable market and the immense potential that lies ahead, Avataar is wholeheartedly committed to supporting Capillary in its pursuit to become a global market leader.”
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