Capillary Technologies raises $95 million in extended Series D round

Out of the $95-million raise, the firm said it will earmark $20 million for Employee Stock Ownership Plan (ESOP) payouts.

Capillary Technologies, a company that offers customer engagement and loyalty SaaS (software-as-a-solution) products and solutions to enterprises, on February 27 announced a fundraise of $95 million in a secondary deal for its ongoing Series D funding round.

The $95 million of secondaries was raised from likes of Avataar Ventures and their limited partners including The Evolvence Group, Pantheon, Unigestion, and 57Stars, the company's founder and Managing Director Aneesh Reddy told Moneycontrol.

In June 2023, Capillary announced raising $45 million in funding in a mix of debt and equity from Avataar Ventures, Filter Capital, and Innoven Capital. In 2018, the firm raised $20 million in a new round of funding from private equity firm Warburg Pincus and venture capital firm Sequoia Capital.

The new round will offer exits to its existing shareholders, Reddy said.

The total funds raised for the Series D round will amount to $140 million and out of the $95-million raise, the firm said it will earmark $20 million for Employee Stock Ownership Plan (ESOP) payouts.

"The additional funding will fuel Capillary's AI initiatives (generative loyalty), accelerate global expansion, and further strengthen its position as a pioneer in customer loyalty SaaS solutions space," Reddy said.

Founded in 2012 by Reddy, Ajay Modani, and Krishna Mehra, Capillary Technologies has a presence across the United States, India, the Middle East, and Asia, in particular, Southeast Asia.

The company claims to be working with over 400 brands, including Tata, PUMA, Shell, Al-Futtaim, Petron, Domino's, Kanmo Group, and Marks & Spencer.

The firm's platform currently powers over 100 loyalty programmes across more than 30 countries and claims to have a reach of over one billion consumers, processing more than five billion annual transactions.

Capillary Technologies reported an operating revenue of Rs 163.3 crore, up nearly 42 percent in FY22 from Rs 114.9 crore in FY21. While the firm filed DRHP with SEBI in 2021 to go public, it deferred the IPO plans to focus on financial metrics.

"While we have deferred the IPO plan, we will revisit it once the firm clocks a 10% growth in Ebitda positive that's when we will think about IPO. We are currently at half of it," Reddy said.

Capillary Technologies while announcing the fundraise said that its growth in the United States expanded fourfold in the past three years.

"As an investor, we believe in the company's vision and are confident in its ability to disrupt the customer loyalty space. The expanded Series D funding and commitment to employee ownership reflect Capillary's strong leadership and potential for long-term success," Mohan Kumar, Managing Partner at Avataar Ventures said in a statement.