By David Stevenson on Wednesday 21 September 2016
DueCourse looking to raise another £10 to £15m over next year
Manchester based DueCourse has secured £6.25 million of investment in its latest round of funding. The current round includes £1.25m of equity and £5m of debt for lending but the business says it is looking to raise an additional £10-15 million in funding over the next 10 months to expand its service around the world. DueCourse claims this £6.25m funding round “is the largest investment seen outside of London for a FinTech company”, although rival fintech platforms such as Cambridge based Syndicate Room, Exeter based CrowdCube and Stockport based Assetz might take a very different view.
The business says its new backers include the founders and investors of Zoopla, LoveFilm, TransferWise and LinkedIn. The SME based lending platform is based in Manchester and uses software to unlock cash tied up in unpaid invoices, giving small businesses better control over their cash-flows.
Software based lending solutions are increasingly popular as are cloud based solutions specifically – remote technology based services are seen as a better way of scaling up quickly, especially at a trans national level. DueCourse has lent over £2 million to UK SMEs since 2015 but this extra capital injection – consisting mainly of debt – should potentially allow the service to grow much faster.
Invoice funding is certainly an increasingly competitive niche, although growth at the top line is impressive. Invoice financing in the UK has risen 63 per cent in the first quarter of 2016 to £711 million, compared to the same period in 2015 when this figure stood at £435 million. 8 out of 10 small businesses who use the cash flow utility go on to regularly use the product. Numbers from the Association for Asset Based Finance (ABFA) show that businesses with a turnover of under £1 million wait on average 72 days to be paid by suppliers and, according to Santander, 46 per cent of businesses report being hit by at least one recent cash flow setback.
DueCourse is also using this extra capital to beef up its top team, recruiting Dylan Smith, a former Apple engineer, who has joined as Technical Architect.
Paul Haydock, CEO and co-founder of DueCourse, said: “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. 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. 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 DueCourse business model?
The Manchester based cloud platform’s service is aimed at small businesses who regularly invoice clients - the free software links to a company’s online accounting platform and uses its proprietary risk engine to assess which invoices are eligible for a cash advance. Once an advance has been requested, the money reaches the customer’s account in a matter of hours. According to DueCourse the traditional invoice finance model requires an SME to handover all their invoices, which can take weeks to set up and requires signing a lengthy contract with complicated fees. The finance company also informs all customers that the SME is in a finance arrangement. DueCourse’s cash flow facility doesn't involve any contracts to use the free software and it is also completely confidential (end customers are never aware that a business is using the service).
DueCourse certainly ticks many boxes, with its cloud based focus, and its innovative product proposition in the fast growing invoice funding space. But it's worth repeating that short term working capital funding is increasingly competitive with many established players looking to migrate higher up the food chain to supply chain finance.