London-based fintech startup Outfund, which claims to change the way online businesses raise funds has announced a new investment. With this investment, the startup now claims to be the largest revenue-based fintech lender in the UK.
Secures €40.7M funding
Outfund has announced the close of a £37M (nearly €40.7M) late seed round of capital, including debt and equity. The round was led by Fuel Ventures along with TMT Investments and Force Over Mass and Chris Adelsbach, a key industry angel.
Outfund has announced that it will use the funds to offer bigger lending rounds to more businesses and make investments into new products and grow its team. With this investment, Outfund pledges to lend over £100M (nearly €110M) to over 5,000 businesses in the next 12 months and will increase its lending limit to £2M (nearly €2.2M).
Daniel Lipinski, founder and CEO of Outfund, says, “As a second-time entrepreneur myself, I experienced first-hand the complex, timely and often imbalanced nature of the old-school financing routes. I knew there was another way and so decided to build it. Our ambition is for Outfund to be the place to go to grow your business without compromising your equity or wasting time fundraising.”
Helps online businesses with fairer funding
The COVID-19 pandemic is driving more people to shop online and it is expected that there will be a 19% increase in e-commerce sales. As many businesses are looking forward to growing their profitability and revenue, there is an increased need to invest in their marketing efforts and inventory. However, it becomes challenging for companies to look out for funding as the traditional sources such as bank loans offer unfair, high compound interest rates and VCs demand high equity dilution.
This is where Outfund serves an alternative financing channel that lets online businesses get the funds they need based on their future revenue projections and at fairer terms and rates.
According to the company, its technology eliminates the bias in lending and improves the terms for financing depending on the businesses’ revenues and performance. Its algorithm pulls information from multiple data sources to find out how a company performs. After derisking the same, it offers cheaper funding with longer payment terms and a flat fixed fee from 5%.
How does Outfund work?
Outfund’s simple online application lets company directors seek capital and apply for finance. It’s not necessary for them to provide business plans as only simple checks are needed. Businesses have to connect their revenue accounts for Outfund to build a funding offer and send money the same day.
According to Outfund, it typically deploys between £10K (nearly €11K) and £2M (nearly €2.2M) of funding and is available to businesses that take online payments, have a minimum of £10K (nearly €11K) monthly turnover and have been trading for at least six months.
Unlike conventional business loans, Outfund claims to make sure that the time for repayment is based on each business’s circumstances and the revenue share agreed. The repayment percentages are also set to ensure that the businesses maintain a healthy cash flow in their everyday operations.