The British company Outfund, a provider of non-dilutive capital for e-commerce startups, has acquired the Spanish company Clicfunds, born just over a year ago and dedicated to the same business. The goal? to land in Spain and boost its alternative financing platform, already available also in Australia and with plans to enter the U.S. this year.
Neither company discloses the amount of the transaction, but Alejandro Poveda, co-founder of Clicfunds and now head of Outfund in Spain, does clarify that the transaction has been made in cash and shares.
To date, the British company has raised 37 million pounds (more than 43 million euros) and claims to have more than 150 million to lend in Spain this year. As Poveda explains, this type of alternative financing platforms raise money through equity to boost their growth and money, through debt funds, to be able to lend.
Outfund has already lent more than 150 million euros this year to e-commerce companies, a segment in which it specializes, which it finances exclusively for marketing campaigns and inventory. “We realized that 40-50% of the financing rounds closed by the founders of these types of startups were going to these areas, but we believe that it makes no sense for their founders to be diluted by these items when it comes to raising money,” explains Poveda.
He notes that what they are trying to do is to keep ecommerce startups raising rounds of funding, but for technology and to strengthen their teams, not for marketing and inventory.
Outfund never enters the capital; it offers financing that it lends without personal guarantees and that does not affect the company’s debt status, according to the executive, who recognizes that in Spain the revenue based finance market is still little known, although it is already very popular in the US and the UK, where he says they are leaders.
What is Outfund’s business model? The company applies a fixed fee to the money it lends, which is usually 6%, and the companies that receive it pay them back what they borrow plus commission on a daily basis with a percentage of their sales. “If we lend 100,000 euros to a company, it has to pay us back 106,000 and it does so from the day after the loan, when we start taking an agreed percentage of its sales until it is paid in full,” says Poveda.
But if the company has no income for a period of time, as happened during the pandemic to a company in the tourism sector that they financed before Covid, it does not pay them back anything in that time. “It’s a very flexible model, which goes according to the company’s sales. If they do well we all win, and if things go bad, we suffer with them.”
Outfund provides growth capital from €10,000 to €2 million, and it does it in 24 hours. The requirement it places on companies to fund them is that they turn over €15,000 a month and do so for at least six months.
“The whole process can be done online, because what we are trying to do is not only that founders are not diluted but also that they do not waste time, since many CEOs spend a lot of time talking to venture capital funds. Therefore, what we are looking for is that, through our website, they connect the platforms they use, such as Sophify, Paypal or Stripe, and thanks to our artificial intelligence algorithms we analyze the company in 24 hours and in that time we tell them if we can give them the money or not”. According to Poveda, 95% of the companies that meet the requirement they ask for have been funded.
Since the purchase of Clicfunds by Outfund, the company claims to have lent 10 million to ecommerces in Spain in one month. Their goal after the acquisition was to lend 7.5 million in the first month and that figure was reached in 15 days.
The company has a similar model to the Spanish-American Capchase, which this week announced that it had raised 238 million, although in the case of the latter it finances startups with a SaaS (software as a service) model in the growth phase and with recurring income. “The difference is that they advance the subscriptions of users who pay monthly, and we analyze the companies, predict through algorithms how much they will bill in the next 6-9 months and determine what percentage of that revenue they have to give us,” says Poveda.
According to the executive, Outfund’s objective is that just as founders look for the most recognized venture capital, for example Seaya or JME Ventures in the case of Spain, they also look for a large alternative financing partner, which gives them peace of mind. “To do this, we are building a very close relationship with clients, which has even allowed us to do deals via WhatsApp. These are companies to which we had already lent money and who need more funds.
Among the companies financed in Spain by this alternative financing platform are Midnight Cosmetics, which they have financed six times for their online marketing campaigns and inventory, and the Catalan company Laagam. They have also just signed a €1 million deal with a company for a TV marketing campaign.