One idea sits underneath the whole case for financing customer acquisition: marketing is not an expense, it is a capital investment. The argument's clearest voice is Pranav Singhvi, a Managing Director at General Catalyst, who has argued across several publications that customer acquisition cost (CAC) behaves like capital expenditure (CapEx) and should be funded like it. Here is the thesis, the evidence he points to, and why it matters for how a SaaS company funds growth.

The core argument: CAC builds an asset

Singhvi's starting point is that a subscription business spends heavily on sales and marketing upfront but recoups that spend slowly, over each customer's lifetime, creating a "cash trough." Traditionally that spend is funded with equity, because variable payback makes ordinary debt a poor fit. In "The Unbundling of 'Growth' Equity" (General Catalyst Insights, March 2023, co-authored with KV Mohan), he argues for separating growth spend from equity financing by treating CAC as an asset. General Catalyst's Customer Value Strategy pre-funds a company's marketing budget and is "entitled only to the customer value created by that spend," with a capped return. If the spend underperforms, the financier owns the downside, getting paid only when the company does. In effect, the company gets a dedicated balance sheet for acquisition, letting it invest aggressively without draining cash or diluting founders.

EBITCAC: a new metric to match

If CAC is capital, then expensing it upfront understates a company's real earning power. That is the case Singhvi makes in "CAC is the New CapEx, EBIT'CAC' Should Be the New EBITDA" (LinkedIn / General Catalyst, July 2024). He draws an analogy to John Malone, who popularised EBITDA in cable by adding back depreciation to reflect that heavy CapEx was building valuable assets. Acquisition spend, the argument goes, deserves the same treatment: it creates customers and their lifetime value, so a metric like EBITCAC (earnings before interest, tax, and CAC) better reflects core profitability. A proven acquisition engine, in his words, "has the properties of an asset and is highly underwritable" and can be financed like one. The mental model splits a tech company in two: the "CAC machine" that invests to acquire, and the operating company that runs the business.

The evidence: Fivetran

The thesis has a real-world test. In "How Fivetran Scaled Its Growth While Generating Excess Cash" (General Catalyst, May 2024, with Harry Elliott), Singhvi documents a Cloud 100 SaaS company that used the Customer Value Strategy to fund acquisition. The result was a rare combination: Fivetran nearly doubled revenue while generating excess cash, rather than burning it early in each customer cohort as efficient go-to-market engines usually do. Financing the marketing spend separately kept it off the P&L's critical path, and the company scaled acquisition without the usual cash hit. Its CEO called the impact "hard to overstate."

Why it matters for founders

The practical takeaway reframes a core decision. If acquisition is a financeable asset, funding it with equity is like paying for a factory out of one year's earnings, expensive and unnecessary when the returns are predictable. A company with proven unit economics can instead fund growth through non-dilutive financing tied to the returns of that spend, which is exactly the model behind a customer value fund. The cost of capital drops, dilution stays off the table, and the company can invest in growth up to the point where the returns justify it rather than where this quarter's cash allows. Singhvi's framing matters because it turns "how much marketing can we afford?" into "how good is the return on our acquisition spend?", a far better question.

References

  • Singhvi, Pranav, and KV Mohan. "The Unbundling of 'Growth' Equity." General Catalyst Insights, March 2023.
  • Singhvi, Pranav, and Harry Elliott. "How Fivetran Scaled Its Growth While Generating Excess Cash." General Catalyst, May 2024.
  • Singhvi, Pranav. "CAC is the New CapEx, EBIT'CAC' Should Be the New EBITDA." LinkedIn / General Catalyst, July 2024.

This article summarises publicly available writing for educational purposes and is not financial advice.