Over the next ten days we wanted to focus on some of Silicon Roundabout’s hottest startups; Today we catch up with Charles Delingpole, co founder of MarketInvoice!
What do you do when Eurozone contagion dominates the press in the public domain creating an almost unprecedented draining of confidence in the business world? What if this culture of near crisis begins to seriously impinge on cashflow?
Charles Delingpole and Anil Stocker launched ‘Silicon Roundabout’ based MarketInvoice in July 2010.
Transformational and forward looking MarketInvoice is a welcome addition to the tech ecosystem providing small businesses with a method of discipline that avoids them being potentially burdened by the problem of late paying clients.
For those SME’s that are inclined to move away from traditional ‘factoring’, MarketInvoice provides an online method of effectively auctioning invoices thereby raising potentially crucial working capital.
Investors effectively bid for invoices and advance upto 90% of invoice value and then profit once the invoice is settled. This ‘real time’ platform provides a genuinely exiting option in an era of significantly reduced bank lending.
Next for Anil and Charles is development and scaling up, having broken even in March 2012 and closing £3.5m of auctions at the same time!
The push is on for this breakout business to secure £30m of funding from the government who are planning to pump £100m through alternative lending platforms as part of their desire to boost small business funding.
The Economist 16th June 2012 runs an interesting piece ‘Raising capital online; The new thundering herd’.
It says “Crowdfunding is booming. A report by Massolution, a research firm, forecasts that $2.8 billion will be raised worldwide this year, up from $1.5 billion in 2011 and only $530m in 2009……There are over 450 “crowdfunding platforms”, including four in China, up from under 100 in 2007…”
Do you see the model of Crowdfunding and the raising of much needed cash to finance young companies as a challenge to the MarketInvoice business model?
I do not see the model of crowdfunding as being a challenge to the MarketInvoice business model.
To understand why we need to look at what MarketInvoice is and how it functions. MarketInvoice is a platform for ambitious growth companies selling to large corporates to sell their invoices so as to finance their growth. At the same time it allows institutional investors to deploy capital into a high yield, short duration asset class. We only allow institutional, sophisticated or scalable, certified high net worth investors to invest. We provide them with an extremely granular level of detail with which to price risk, in addition to a portfolio of inventory over which to diversify this risk. On the company side, MarketInvoice is perfect for larger, fast-growing companies, with turnover between £1-100m. We have listed companies using MarketInvoice, as well as start-ups with established relationships with blue chip corporates.
Crowdfunding or peer to peer is largely retail focussed. It encompasses individual consumers funding watches on Kickstarter, but of more relevance are the models that you see operated by our friends in the Next Generation Finance Consortium: financing equity and debt for start-ups and small companies. The critical distinction between crowd-funding and the MarketInvoice model is that there is a step change in scalability and sophistication. This is the appropriate investor base for a receivables finance market that is time sensitive (in that decisions have to be made quickly), varied and complex (hence requiring differential pricing) and finally, large (annual volume of receivables finance in the UK is c. £230bn in annualised flow). Retail investors gives you access to a lower cost of capital and perhaps would work on a retail fund basis but is in no way appropriate for the MarketInvoice platform.
As the market changes at such a fast pace do you find the business model you have ‘pivoting’ at all?
It’s important to be aware of new opportunities and ways in which you can improve your business to better serve clients. Having financed £20m of receivables and gained 100 clients in a little over 18 months of operation I think we’re very happy with our progress. But we can always do more, improve and be better.
Thank you Charles.
To find out more about MarketInvoice visit their website at MarketInvoice.com
Alternatively, to find out more about available office property in the Silicon Roundabout area contact Kushner at www.kushnerproperty.com
