Capillary Technologies raises $45 million to fuel acquisitions and expansion

Filter Capital also participated in the round, while Innoven Capital provided the debt.

Founded in 2012, Capillary Technologies 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.

The company has raised roughly $40 million so far as equity funding.

The software platform is looking to use the latest 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, founder and managing director, Aneesh Reddy told ET.

“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. 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,” said Reddy.

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Taking the inorganic route, the company will also look to enter newer industries such as telcos and travel and hospitality, apart from BFSI, he added.Where Capillary earns its revenue

Currently, the company earns a third (33%) of its revenues from the US market, with Asia largely contributing 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 Covid-19.

Capillary was looking to list on 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 plans 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 and Domino’s, powering over 100 loyalty programmes for customers.

Earlier acquisitions

Capillary has been scouting for consolidation opportunities globally and has made almost five acquisitions till date, with the most recent one 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 earnings before interest, taxes, depreciation, and amortisation positive (Ebitda-positive or operationally profitable) in FY22 and will look to generate free cash flows in FY24.