GamesBoost42, a global start-up finance company, has opened a $5 million credit line for the portable mini projector manufacturer Cinemood.
Cinemood (on the Russian market — “Multikubik”) is part of the Russian-Belarusian Venture Investment Fund portfolio and the Far East High-Tech Fund, created with RVC capital participation. The lending and risk collateral technology was developed in collaboration with Cinemood and is innovative for start-ups selling hardware products through online and offline channels.
Cinemood plans to use the funds received to finance marketing and production costs and scale in the US and European markets.
Traditional factoring considers only the revenue stream fr om deferred sales. GamesBoost42 (part of the GamesUp42 holding) provides working capital financing services for high-growth start-ups under a cash flow factoring scheme from all future sales. The closing time for such transactions is, on average, 1-2 months, in contrast to the period of 3-6 months, typical for bank and investment financing.
Mikhail Bukhovtsev, General Director of Cinemood: “We approached the financing deal in stages, started with financing marketing costs, and in August-September, together with GamesBoost financial experts, we developed the first case on the Russian market for factoring all future sales to receive financing for all Cinemood production costs. Such a financing scheme will allow us to smoothly scale sales without attracting investments over the next two years”.
It is problematic for fast-growing start-ups at the MVP stage of a product or growth stage to obtain debt bank financing for marketing and production. As a rule, such projects have not yet passed the break-even stage or are at the testing stage without a stable forecast model.
The future sales factoring model is interesting for any start-up that needs to raise funds to test hypotheses or scale sales. In the opinion of Mikhail Fedotov, Managing Partner of the Russian-Belarusian Venture Investment Fund, “in the face of a shortage of liquidity, technology companies will also be in demand for new models of raising capital.”
To attract factoring, a start-up shows its sales plan for the upcoming period and, after its completion, has the opportunity to increase the lim it of available funding. Factor (GamesBoost42) can connect in view-only mode to the client’s CRM and bank accounts to see marketing indicators and revenue online.
Igor Ivchenko, Director of GamesUp42 holding: “The ultimate idea of the GamesBoost product is to create an online banking platform for non-standard customers who, due to their innovativeness or non-standard nature, cannot attract classical bank financing. Such an approach to funding was not possible five years ago. There was no such amount of data and technologies for tracking sales. Now you can follow each sale’s economics and, based on these figures, decide on the provision of financing and calculate the size of the risks”.