Gavin Baker+ Your Authors @GavinSBaker Husband, Becky Painter. CIO, Atreides Management. Former PM, Fidelity OTC fund. No investment advice, views all my own. Feb. 09, 2020 1 min read + Your Authors

1) Great post on ABS backed by recurring software revenue.

As Robert Smith says “Software contracts are better than first-lien debt. You realize a company will not pay the interest payment on their first lien until after they pay their software maintenance or subscription fee.”

2) Securitizing recurring software revenue is super logical and curious as to when it begins to happen. Likely starts small with OTC/private securitizations and then slowly institutionalizes over several years.

3) Only caveat to @Alex_Danco thesis would be that SaaS valuations are so elevated right now that equity financing is relatively cheap so I’m not sure financing via securitization is cheaper and more founder friendly right now but this won’t always be the case.

4) And for investors: SaaS switching costs feel like they are going down rather than up so caveat emptor whether buying future putative ABS instruments or equity.

You can follow @GavinSBaker.


Tip: mention @threader_app on a Twitter thread with the keyword “compile” to get a link to it.

Enjoy Threader? Sign up.

Since you’re here...

... we’re asking visitors like you to make a contribution to support this independent project. In these uncertain times, access to information is vital. Threader gets 1,000,000+ visits a month and our iOS Twitter client was featured as an App of the Day by Apple. Your financial support will help two developers to keep working on this app. Everyone’s contribution, big or small, is so valuable. Support Threader by becoming premium or by donating on PayPal. Thank you.

Follow Threader