E-commerce inventory financing
Bringing the Marketplace Model to Inventory Financing with Sean De Clercq
How a crowdfunding approach to capital helps small brands access capital
In this episode of E-Commerce with Coffee?!, show host Nate Svoboda is joined by Kickfurther CEO, Sean De Clercq to talk about Kickfurther, the marketplace financing model, the democratization of e-commerce, and many more interesting and exciting topics.
Kickfurther is a platform dedicated to connecting brands with capital, which also means it helps funders get connected with exciting projects. Sean is a veteran of the industry himself, which is what made the Kickfurther solution so natural.
As always on the show, the conversation starts off with the titular question: how does Sean take his coffee?
Sean is fortunate enough to have a home-espresso machine at his disposal, and his caffeine fix tends to come in the shape of 2–4 shots of espresso per day. Definitely an acquired taste, but from the looks of things, it seems to do the trick!
After sharing their feelings on espresso, Nate and Sean dive right into the meat of the conversation, starting with Kickfurther and the inspiration for such a project.
Where great solutions come from
As mentioned, Sean is a veteran of the growing business project. He was running his own business, doing well, and when that order comes in that requires sudden scaling, things get tough.
It might seem paradoxical at first — sell more do better, right? In reality, however, brands operate within implicit production limits. To a certain extent, selling more is better, but selling enough more can fall outside of current production or fulfillment capacities.
The response to that order can make or break the business, especially if the response is affirmative. Ramping up production or processing like that isn’t just a matter of putting more work in, it’s an expensive growth investment with an ambiguous ROI.
Furthermore, financing this investment isn’t trivial, and traditional financing options were either entirely inaccessible to small brands or even predatory. At least, that was the case…
The marketplace model
Great solutions come from experience, and that’s how Kickfurther and the marketplace financing model were born. Traditional financing solutions and institutions tend to be risky deals on either end.
The financer is looking to make as much money as possible on their investment and, simultaneously, is putting plenty of capital on the line for an unsure investment. The financee, on the other hand, is likely signing onto margins and other agreements that might not be ideal for the business in the long run.
Kickfurther and the marketplace model serve as an intermediary, optimizing the marketplace to bring vetted and likely-successful brands together with investors who are excited and capable to support a growing vetted business. This framework helps financers be more confident in the projects they’re financing and helps growing brands access capital without being roped into sub-optimal agreements.
Ultimately, this opens up the possibility for success on either side of the market and is why Kickfurther has been able to service $12k deals up to million-dollar deals.
What winners look like
The marketplace model bridges the gap and allows small brands to compete with larger companies, but that doesn’t suddenly make every entrepreneur a billionaire, so what’s the deal? As Sean explains, the Kickfurther model does help bridge the gap and does provide smaller and growing brands better and easier access to capital, but there are still some brands that are more likely to succeed than others.
Sean recounts how, even with access to capital, scaling isn’t a trivial process. Some brands think that selling at very low prices and low margins is a good differentiator that will lead to better business, but when those low prices indeed do lead to more business, the brand does not have the capacity to scale without going into bankruptcy. Because of this, Sean breaks down the key points to a successful entrepreneurial project, which Nate jokes can be broken down into bullet points for the show notes:
- Identify a problem
- Solve it better than others
- Have good margins
- Open up wholesale
- Increase volume
- Leverage volume to negotiate discount
- Scale, scale, scale