Outfund raises £115m Series A, becoming the largest revenue-based finance provider in the UK – London Business News
Outfund are changing the way online businesses raise funds, today announces the close of a £115M Series A round of equity capital and debt amount. The funding round was led by Force Over Mass, PostFinance, 1818 Venture Capital and Tribe Capital, and will support Outfund’s rapid global growth as it provides a faster, fairer and more affordable way for SMEs to raise growth capital across the globe.
Founders seeking capital can apply for finance using Outfund’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, Outfund will build a funding offer and deploy the same day.
Outfund can deploy between £10,000 and £10million 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.
Unlike conventional business loans, Outfund ensures the time taken to repay is based on each businesses’s circumstances, with an agreed revenue share creating flexibility for founders. Outfund’s revenue-share percentages are set to ensure each business maintains a healthy cash flow in its day-to-day operations; the better the company does, the better Outfund does. For the first time, the funding balance between a company and a lender is equal.
Outfund achieved significant growth in 2021, expanding revenues sixfold and expanding into three new countries. With its wider reach and new capital, it is set to loan over £500M in 2022 and expected to fund over 5,000 businesses across the globe.
Daniel Lipinski (CEO), “What sets us apart from the market is our technology and our ability to provide in-product finance solutions to almost any partner, ensuring not only rapid growth but also the ability for our partners to provide a range of value-add financial products to their customer base”.
The pandemic drove more people to shop online, with an expected 19% increase in e-commerce sales. With the “golden retail quarter” fast approaching again, many businesses will need to grow and sell more on the web in order to drive continued revenue and profitability, making increasing investment into inventory and marketing a priority.
However, the funding landscape is evermore challenging, with limited access to capital and traditional financing routes offering an unfair deal to founders. Bank loans offer high compound interest rates (or are entirely inaccessible outside government schemes), while VCs demand equity dilution. Outfund offers an alternative financing channel, whereby online-based businesses can get the funds they need, when they need them. The model is based on future revenue projections, and this data-driven approach means significantly fairer terms for founders.
With this new investment, Outfund is pledging to invest more than £500m of lending to over 5,000 businesses in the next 12 months, and will increase its lending limit to £10m per company. In addition to using the funds to lend more capital to more businesses, Outfund also plans to make investments into new products, such as working capital and revolving credit, as well as in team growth.
Today’s round and ambitious growth plans means that Outfund will now be the largest revenue-based finance provider in the UK, Spain, and Australia.
Outfund’s technology takes the bias out of lending and improves financing terms, with analysis based solely on a business’ revenues and performance. 20% of Outfund’s portfolio are female founders, a testament to their commitment to advancing the democratisation of access to capital. Its advanced algorithm pulls information from multiple data sources to determine how a company performs, and is then able to de-risk the proposition. This allows more affordable funding, with longer payment terms and a flat fixed fee from 2%, making it the most competitive offering in the market.
Daniel Lipinski, founder and CEO of Outfund, said, “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.
“This is why we have spent time developing a way to make the process of securing money for growth easier, fairer and, most importantly, faster. 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.”
“The last 6 months have shown relentless growth for the business and I am proud of the number of entrepreneurs we have been able to support in this time”.
Mark Pearson, founder and managing partner of Fuel Ventures, added, “Daniel and the team are 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. At Fuel we work with the most ambitious entrepreneurs building market leading companies. Outfund is a perfect example of this – a strong, passionate founding team creating a game-changing venture that is now a leader in its field.”
Filip Coen, Partner at Force Over Mass, said: “Outfund provides SMEs with the short-term financing options they deserve: fast, flexible and on good terms. A modern, digital-first credit provider with automated credit and risk scoring, managed by an exceptional team. We are very excited to join Daniel and Outfund on the journey ahead”.
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