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Vikas Garg
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(917) 733-5414
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Overview
Finovance is raising up to $15.0 million allocated in two separate capital tranches as follows:
1. $2.0 to $5.0 million Late Seed Equity for working capital and general corporate purposes
2. $7.5 million subordinate credit tranche:
• to leverage the $25 million warehouse credit line¹
• warehouse line can grow to $50 million
• Offering SMBs full life cycle of growth capital (see Solution/Strategy)
• Initially offering forward-factor financing (or revenue-based financing “RBF”) of future receivables ranging from $30,000 to $2.0 million
• Grasshopper Bank strategic BaaS partnership in place:
• FDIC insured accounts up to $250,000
• Debit/Virtual cards “payments.” (interchange fee opportunity)
(1) Credit facility subject to complete due diligence and customary closing conditions
Solution / Strategy
More Robust RBF Solutions
- High return opportunity – avg target RBF factor rate of 1.5x – 1.65x
- Initially targeting RBF financings from $30,000 to $2 million
- Ability to offer diverse and longer payment terms of 3 to 60 months
- Customized and dynamic pricing, offering either a fixed or variable repayment option
- Rapid AI assisted underwriting – in some case minutes
- No blanket lien on assets or guarantees
- Offer “white labeled” banking products and services via our banking partner
Management
Manuel Henriquez| Co-Founder, Co-Chairman, and Co-CEO
- Serial entrepreneur, having founded or co-founded six prior ventures
- Founder and former Chairman, President and CEO, Hercules Capital (NYSE: HTGC, $2.0 B mkt cap); raised over $3 Billion and distributed approximately $1.0 Billion to shareholders
- Partner, VantagePoint Venture Partners, a $2.5 billion multi-stage technology venture fund (2000-2003)
- President and Chief Investment Officer, Comdisco Ventures, a division of Comdisco, Inc., a leading technology, and financial services company (1997-2000)
- Vice President, Crosslink Capital; FKA Omega Ventures – Robertson Stephens (1994-1997)
- Director of Finance and Operations, ON Technology, a Kleiner Perkins backed software startup (1991-1994)
- Lucile Packard Foundation for Children’s Health, the sole fundraising entity for Lucile Packard Children’s Hospital and the child health programs at Stanford University School of Medicine.
Craig Schmeizer | Co-Founder, Co-Chairman, and Co-CEO
- Co-founder and Co-CEO, TshirtKing.com, a consumer business operating in five international markets
- Founder, Idle Group, a consolidator of D2C sleep brands including Idle Sleep, Haven, and Mend Sleep
- Co-founder, Resident, named the fastest growing e-commerce retailer in North America by Digital Commerce 360 in 2018
- EVP Marketing, JP Morgan Chase Bank, credit card division
- SVP and Division COO, Altisource, a large mortgage servicing tech firm
- SVP Marketing, Providian Financial
- Corporate Vice President, The New York Life Insurance Company, responsible for International (China, India, Mexico, Taiwan).
- VP, HSBC, credit card marketing
- Co-Chair, Direct Marketing Association’s International council
Gavin Conway| Co-Founder, Chief Product Officer “CPO”
- Entrepreneurial ecommerce expert, with deep technical, analytical, and commercial expertise, with 18+ years of original and unique B2B and B2C product and digital marketing leadership for cross sector brands including Airbnb, Google and Virgin Group
- Chief Growth Officer, GrowthShop, leading a team of 30+ engineers, UX designers and product growth specialist (2020-2023)
- Independent Consultant, delivering digital growth and transformation services for clients that included edtech, social content, crypto-finance, technology recruiting and B2B SaaS businesses (2017-2020)
- Head of Growth Marketing and Digital Innovation, Omnicom Media Group (2008 – 2016)
Tayo Dayo| Chief Technical Officer “CTO”
- Responsible for architectural design of Finovance platform including IT governance; compliance with NIST, ISO27001, Cyber Essentials and Cyber Essential Plus best practice deployment
- Interim CTO / IT consultant for over 30 years across a spectrum of clients and projects
- Noted public speaker on IT security, FinTech, Infrastructure, Ethical Hacking, and EU’s General Data Protection Regulation (“GDPR”)
- Proven history of leading design and development of IT projects from inception to completion.
Specific Risks
- Revenue Based Finance (“RBF”) is often not distinguished from and is confused with Merchant Cash Advance (“MCA”) possibly suffering some reputational carryover damage associated with MCA in its early stages
- FinTech is evolving rapidly, providing an uncertain market future for products designed for today
- Risk adjusted return requirements for RBF financing may be too expensive for a large market adoption
- SMBs selection, initially, will be dependent on new/unproven underwriting model
- Early stage fintech companies face a highly competitive labor markets affecting the ability to meet staffing needs and to manage salary expense
- Current condition of the credit markets driven by FED policy may limit access to on-going revolving credit facilities
- Regulatory environment for Banking-as-a-Service “BAAS” product offerings is evolving
- SMBs entities may be slow to adopt BaaS offerings preferring to maintain existing direct banking relationships
- RBF repayments are variable subject to an Obligor’s daily, weekly or monthly revenue generation as its primary source of repayment
- Future revenue projections based on trailing 24 month may not accurately reflect actual revenue, source of RBF repayment, potentially resulting in losses
- Obligors could potentially sell the same future income streams to multiple RBF financing sources
- Private securities are speculative, illiquid, and carry a high degree of risk – including the loss of the entire investment