The investment shows the startup business model is a popular new conduit for invoice-based lending services for small businesses, from Israel to Palo Alto
Invoicing startup DueCourse announced a £6.25 million (~$8.15 million) funding round Monday morning, led by a number of angels ahead of a planned £10-15 million Series A round that is slated for summer 2017.
The company provides advances for invoices SMEs are yet to receive. They automate the repayment process by linking your DueCourse account with your debit card, which will send back the funds once your invoice is paid. Their software debuted in 2015 and uses their own risk assessment algorithms before unlocking loans. DueCourse Co-founder and CEO Paul Haydock is a serial entrepreneur, founding My Parcel Delivery and exiting from that business in 2013.
“This extended Angel round of investment was actually oversubscribed, which highlights just how much interest there is among investors around our scalable, data-led technology and its application around the world,” Haydock said in a statement. “The funding is a great boost for the company and will help us go from strength to strength as we continue to expand and improve our software.”
The round includes £1.25 million (~$1.63 million) in equity and £5 million (~$6.52 million) for use in loans to SME clients. Participants included Zoopla Founder and CEO Alex Chesterman, Lovefilm co-founder Simon Franks and Rocket Internet’s venture capital branch GFC. New investors also have experience investing in TransferWise and LinkedIn.
SMEs may find themselves waiting 2.5 months before receiving payment according to the Asset Based Finance Association (ABFA). ABFA’s former CEO Katie Sharp now sits on DueCourse’s board.
“We saw the opportunity for a company to disrupt the market and help SMEs get access to the cash they need to fuel their business, in real time,” Haydock added. “We want to be seen as a new kind of cash flow utility – once a business has linked their accounting package for free, DueCourse is simply there in the background for them to access the money in their unpaid invoices whenever they need it.”
The use of unpaid invoices for upfront advances from a lender is called factoring and it is fast becoming a hot space for FinTech, specifically in the British market. Similar to payday loans in concept, in practice they can actually give borrowers a better rate to receive the operating funds they need to keep their business running seamlessly. The biggest player in the game is Israeli-founded Fundbox, whose $55 million Series B funding last year brought it over the $112 million mark according to Crunchbase. Another Israeli company BlueVine grabbed $40 million in Series C in January with undisclosed money from Citi Ventures in April.
DueCourse was founded in 2014 and has 12 employees based in Manchester, England.