With limited access to capital and traditional financing routes offering an unfair deal to founders more often than not, the funding landscape has been challenging, Bank loans offer high compound interest rates (or are entirely inaccessible outside government schemes) while VCs demand equity dilution.
Changing the game, UK-based Outfund is offering an alternative financing channel where online-based businesses can get the funds they need, when they need them.
The revenue-based finance provider has now closed £115 million Series A round of equity capital and debt amount to provide a faster, fairer and more affordable way for SMEs to raise growth capital. With this new funding, the startup will loan over £500 million to 5,000 businesses in the next 12 months, and will increase its lending limit to £10 million per company. The round was led by Force Over Mass, PostFinance, 1818 Venture Capital and Tribe Capital.
Founders seeking capital can apply for finance using the platform’s simple online application. Given the proprietary technology and product, only simple checks are required to access capital and there is no need for companies to provide business plans or go through prolonged risk assessments. Businesses simply connect their revenue accounts and, with access to this data, the startup will build a funding offer and deploy the same day.
Outfund claims it can deploy between £10,000 and £10 million of funding, and is available to businesses that take online payments, have a minimum of £10,000 monthly turnover, and have been trading for at least six months.
So what new does the platform bring on the table? Unlike conventional business loans, the startup claims the time taken to repay is based on each businesses’s circumstances, with an agreed revenue share creating flexibility for founders. Its revenue-share percentages are set to ensure each business maintains a healthy cash flow in its day-to-day operations.
Daniel Lipinski, CEO, Outfund said: “Our approach has been warmly received by the founders and directors so far, and now we’re looking at how we can open this up to more businesses and continue to be part of their journey to success for a long time.”
Mark Pearson, founder and managing partner, Fuel Ventures, added, “The startup is pivoting the model of business funding, rebalancing the scales so that business owners don’t lose out financially while getting the capital they need to supercharge their online business’s growth.”