Forward Partners, the early-stage venture fund and start-up studio, has long provided something a little different to the U.K’s tech start-up ecosystem, and today the VC is continuing that trend with the launch of “Forward Advances,” a revenue-based financing option for start-ups that need to strengthen marketing.
Aimed at “fast-growing” e-commerce, b2c and market SaaS organisations, Forward Advances will supply development capital to start-ups in return for a 6% flat charge, with payments taken as a small portion of monthly profits.
“Unlike traditional venture capital or standard bank loans, a Forward Advance opens a novel method for creators to finance their marketing invest without quiting equity, or having to commit to personal warranties,” describes Forward.
Crucially, this sees repayments structured as a portion of profits, suggesting that business won’t be required to make big repayments throughout tough economic times i.e. slower months mean smaller payments.
In addition to the loan, Forward Partners says creators will have gain access to its start-up studio group, consisting of item and development experts that can use hands-on competence and aid accelerate their development. The idea is that together with capital, Forward Advances will provide insight into how the marketing money is finest released to make the most difference.
Forward Partners’ Luke Smith is leading Forward Advances, and states that client research study performed by the VC revealed that raising capital to buy marketing is frequently challenging. “Creators find it prolonged, expensive, dilutive, difficult or a combination of all 4,” he states. One method to fix this is by integrating “flexible financing” with in-house development professionals, which is exactly what Forward Partners is doing.
Which brings us to the existing Coronavirus pandemic and resulting downturn and certainty, leading me to ask if there could be an even worse time to release a revenue-based financing product?
“This is definitely a tough time for a lot of e-commerce and market companies, especially those in sectors that have been hit hard by COVID-19 disruption such as travel or events, and we’ve regretfully had to deny some companies in those spaces,” states Smith.
“However, we have actually seen that a number of sectors such as family goods, gaming or edtech are showing strong development. We will concentrate on sectors that are positively affected or unaffected by the disruption for the next couple of months and after that widen our sector focus as the marketplace enhances. With VC funding anticipated to draw back, we anticipate that a great deal of business with strong principles will require cash to fund growth.”
More broadly, Smith underlines that Forward Advances is focusing on companies with “strong principles.” This sees the VC take a look at cash flow as part of the choice making process and will just make advances to business that it thinks will be able to pay back the loan. “That stated, the loans are unsecured, so we can’t make sure we will get our refund and if business profits fall to absolutely no we do not get paid back,” he describes.
Asked why more VCs do not use this kind of item, Smith says that in spite of making lots of dangerous investments, the VC industry is normally “very conservative” when it pertains to its own organisation model. “Forward Partners has always been a little different, first by building our studio group that uses a level of assistance to our portfolio not seen at other VC funds, and now by releasing Forward Advances,” he adds. “We see ourselves as a service provider to business owners and plan to keep expanding the variety of services that we offer.”
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.