Startup Financing

FI London - Startup Financing

Nathan Evans | 16.02.2023 | 19:30 Uhr
Introduction
fulfin - financing ecommerce

fulfin
✩ Exclusively for Online Businesses (Ecom & SaaS)

✩ Backed by German & International investors

✩ Analysed 3mio ecommerce financial transactions

✩ Evaluated thousands of ecommerce businesses

✩ A data first approach to lending

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Introduction
My Background

Nathan Evans
✩ 25 yrs in Fintech, Startups & Ecommerce

✩ Co-Founder of fulfin - financing ecommerce

✩ Speaker & Author on Entrepreneurial Financing

✩ Director of Founder Institute, Munich

✩ Angel Investor

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Introduction
In the next 10 minutes I’ll show you the importance of understanding risk capital and your
fundraising options

Agenda
❏ Why Finance?
❏ Understanding the Financing Blend
❏ Investor (Equity) Vs Loan (Debt) Financing
❏ Alternative Lending - What you need to know
❏ Final Thoughts

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Why Finance?

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Why Finance?
Leverage can help achieve an exit valuation in a significantly shorter timeframe

Scale 6X faster
by using 80% Debt
Financing

https://www.fulfin.com/de/calculator/

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Problem
Working capital is an acute problem for all product businesses

Cash flow
The e-commerce business model … before generating sales with
requires significant upfront cash… 50%+ profit margin

Cash Flow from Sales Proceeds

0 Time
Advance- & balance payments to supplier

Logistics & import costs

Cash conversion cycle is
3 to 9 months
Marketing costs

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Understanding the Financing Blend

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Understanding the Financing Blend
External vs Internal Financing

EXTERNAL FINANCING INTERNAL FINANCING

Bank Loans Bootstrapping

Investors
Owners Funds
FINTECH

Subsidies
Shareholder Reinvested Profit
Loans

DEBT

EQUITY
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Understanding the Financing Blend
Types of Capital

DEBT Traditional lending Bank loans

DEBT
Bank overdraft

Alternative lending Product backed EQUITY

Revenue backed
Optional
Mezzanine conversion convertibles Inventory backed
Mandatory
conversion convertibles Uncollateralized

Investment
EQUITY

Subsidies

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Risk Capital Overview
Capital by Startup Lifecycle Phase

DEBT
UE
EN
Private

V Equity

RE
EQUITY VC
(Venture
Venture
Debt

Capital)
Accelera-
tors Capital
Markets
RBV /
MCA Bank
Loans
Angels
Consumer Loans
Factoring

VSOP Public
FFF (Fools, Friends & Family) Equity
Line of
Product credit
Own funds Credit cards Subsidies Financing

START LAUNCH TRACTION SCALEUP MATURITY

COMPANY STAGES

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Understanding the Financing Blend

There are many options and your decision puts you on a specific path

One Possible Path

INCUBATORS
SEED PRIVATE EQUITY
ANGEL SERIES A GROWTH EQUITY
FFF EXPANSION VC
CROWDFUNDING

AVG 6 (US) TO 10 (EU) YEARS

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Understanding the Financing Blend

There are many options and your decision puts you on a specific path

Another Possible Path

Bank Loans

Ecommerce Lending
Owner Funds

Many Exits inside 5 years

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Understanding the Financing Blend
Smaller but faster exits are often the better option for the founder

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Equity (Investor) Vs Debt
(Loan) Financing
(Pros & Cons)

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Investor (Equity) vs Loan (Debt) Financing
Venture capital - Pros & Cons

Larger Investments Less ownership & control

No Fixed Repayments Contractual complexity

Professional support No clear exit strategy

Long-term alignment Expensive process

Higher equity leads to Long & intensive process

better credit conditions

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Investor (Equity) vs Loan (Debt) Financing
Debt Financing - Pros & Cons

Short “time to funding” Smaller investments

Costs are known upfront Personal liability

No dilution Periodic repayments

Maintain control Covenants

Flexibility & freedom Bankruptcy risk

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Alternative Lending - What you need to know

Alternative Lending

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Alternative Lending - What you need to know
What does it actually mean?

Alternative Finance refers to any lending practice

that occurs outside the traditional financial system
such as banks and capital markets.

Source: https://en.wikipedia.org/wiki/Alternative_finance Nathan Evans | fulfin - financing ecommerce | Seite 18

Alternative Lending - What you need to know
Alternative Lending - Further Pros & Cons

Fast and simple Unfamiliar products

Higher approval rate Unfamiliar partners

Larger loans Unfamiliar pricing

Alternative collateral

Value added services

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Alternative Lending - What you need to know
Examples of new funding and financing options for ecommerce and technology companies

&
Prefund CCs
Factoring / +
Working Supply Chain Revenue Based / P2P Lending
Reverse Embedded Finance
Capital Loans Financing Merchant Cash +
factoring +
Advance Crowdlending Venture Debt
+
etc, etc.

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Strategy - Maximize your available liquidity
There is no right answer - It’s a financing blend and it’s all in the mix!

Investor Financing CCs and overdraft Bank Loans Subsidies Alternative

(Equity) Lending

<€100k (Rev
Typical Size >€50k (up to €mios) >€50k €10k - € 1Mio. €1k - €1Mio.
dependent)
Tenor Unlimited 1 month 1-10 years unlimited 1-12 Monate

20% Dilution 5 - 15% p.a. 0% 1 - 7% Fee

Cost 1 - 10% p.a.
(>100% p.a) (up to 50% p.a TCO) (but with strings) (10 - 25% p.a.)

Speed ★ ★★★ ★★ ★ ★★★★

Effort ★ ★★★ ★★ ★ ★★★

Transparency ★ ★★ ★★ ★ ★★★★

Digitalization ★ ★★★ ★ ★ ★★★

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Key Takeaways

Final Thoughts

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Final Thoughts
The difference between scaling and not scaling is the decision to leverage

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Key Takeaways

- Understand why you need financing (working capital vs investing capital) ......and
don’t use a sledgehammer to crack a nut

- Evaluate if you can afford the time demand of investor interaction both before and
after raising
- Calculate your all-in cost of finance correctly and then decide on cost vs benefit
- Explore the many options to finance growth and build a holistic solution that best
meets your needs
- Seek professional advice (Virtual CFOs,

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Thank you for your
attention!
Nathan Evans
Co-Founder & MD

+49 172 686 5870

n@fulfin.com