Capillary Technologies, a leading Indian SaaS startup specializing in loyalty management and customer engagement solutions, has successfully secured $45 million in a recent funding round. The funding infusion comes at a critical time when late-stage startups are facing challenges due to the ongoing market slowdown. Capillary Technologies plans to utilize this capital to expand its global presence through mergers, acquisitions, and strategic growth initiatives.
Avataar Ventures, along with its LPs Pantheon, 57Stars, and Unigestion, led Capillary’s Series D funding round. Filter Capital and InnoVen Capital also participated in the round, which consisted of $40 million in equity and approximately $5-$7 million in debt. With this latest investment, the startup has raised a total of nearly $150 million in capital to date.
Since its inception in 2012, Capillary Technologies has primarily focused on the retail sector in India and Southeast Asia. However, in recent years, it has expanded its offerings and made inroads into other markets, including the Middle East, South Africa, and the United States since early 2021.
Capillary Technologies sets itself apart in the market by leveraging gamification strategies to enhance customer loyalty. This approach has proven successful across various industries such as commerce, retail, aviation, and hospitality. The startup’s suite of technology-driven, cloud-native solutions has attracted a wide range of clients. With over 250 brands across 30 countries and powering more than 100 loyalty programs, Capillary Technologies serves renowned names like Domino’s, Tata Group, Puma, Shell, Petron, and Marks & Spencer. Its technology reaches over a billion customers and facilitates over 5 billion transactions annually.
Founder and Managing Director Aneesh Reddy explained that Capillary Technologies takes a product-centric approach rather than simply providing services based on customer requests. Since entering the U.S. market a couple of years ago and acquiring customer experience startup Persuade, Capillary’s business has grown 3.5 times, with the U.S. now accounting for over one-third of its revenues.
The startup has strategically acquired five U.S.-based companies, with the most recent acquisition being Brierley, a Texas-based loyalty solutions provider, from Nomura in April 2023. These acquisitions have enabled Capillary to expand its solutions across diverse industry verticals.
With the fresh funding, Capillary Technologies aims to further expand its presence in the U.S. and Europe through strategic acquisitions. Reddy emphasized the profitability of the company’s core business and mentioned that the excess cash on the balance sheet would be used for acquisitions. While Capillary had plans to go public in India, the timeline has been delayed due to market conditions. Reddy stated that the IPO in India is still being considered and may be executed within the next three years.
Capillary Technologies currently has over 750 employees, including 200 contractors, and maintains offices in Dubai, Indonesia, Malaysia, Singapore, India, and the U.S. Renowned venture capital firms Sequoia Capital and Warburg Pincus are among the existing backers of the company.
Mohan Kumar, Managing Partner at Avataar Ventures, expressed his admiration for Capillary’s business transformation over the years, especially its expansion into the U.S. and Europe, which has solidified its position as a leader in loyalty software. Kumar believes in Capillary’s potential to become a global market leader and pledges continued support.
In conclusion, Capillary Technologies’ recent funding round of $45 million will propel its global expansion plans and enable strategic acquisitions to further enhance its position as a leader in loyalty management and customer engagement solutions. With its profitable core business and an impressive track record, Capillary Technologies is well-positioned for future growth in the rapidly evolving SaaS market.