Traditionally, business owners have three solutions to finance their companies: debt financing, factoring and equity fundraising.
In their young years, startups and digital businesses struggle to access significant amounts of debt, as their fledgling balance sheets often don’t have the assets required by the banks as guarantees or collaterals. Factoring works well at later stages but requires a heavy initial process to put in place. And equity fundraising is obviously familiar to us at XAnge, since it’s what we do on a daily basis. But VC monies tend to be focused on a limited number of hypergrowth companies.
In short, raising funds is a complex, time-consuming and frequently frustrating process for entrepreneurs. Enter Revenue Based Financing (RBF)… and Silvr.
Silvr was one of the pioneers in Europe to offer RBF at scale. It is today the market leader in France and is quickly expanding Europe-wide.
For e-commerce players, Silvr finances acquisition campaigns from €10k to €10m, and gets paid back based on the actual level of generated revenues, without taking any guarantees. The grant and amount of funding are determined by the observable performance of the business. Silver only charges a fixed commission of 6-9% on the amount financed. There is no interest and no maturity, application fees or other costs. Silvr financing is made available on a virtual bank card, to pay for media expenses.
For SaaS companies, Silvr allows businesses with at least 6 months of cash horizon and 10k€ MRR (Monthly Recurring Revenue) to turn a year’s worth of recurring revenue into cash, instantly, for a commission of 10%. It’s like having monthly or quarterly customers pay annually upfront. In the first month, the client can convert up to 40% of its monthly contracts into annual contracts, then up to 80%, as the funding follows the ARR increase. Cherry on the cake, Silvr’s funding appears on the bank account of the company within 72 hours.
Traditional lending works as a one-off process: a bank takes a deep look at your annual accounts and makes a decision to lend you a lump sum to be paid back over a number of years. To mitigate default risks, the bank requires guarantees, typically valuable assets in your business. This is a deep, legally complex and rigid process. Bank debt and venture debt both share this complexity.
In contrast, Silvr lends in a matter of days, requires no guarantees and creates no capital dilution. Where is the magic? Software and connectors: to evaluate risks in real time and determine the amounts to lend at each step, Silvr is connected to the clients’ accounts (Shopify, Google Ads for e-commerce; Stripe, Recurly, Chargebee for SaaS companies). So the lending decision becomes a gradual process, fine tuned on a monthly basis, monitoring the actual efficiency of the lended monies. As long as the debt creates additional healthy returns, more money can be put at work.
As VCs, we are pleased to see the emergence of such a complementary offer to what we do. Several SaaS startups in our portfolio already validate the model, since it provides an alternative access to financing in a growth phase, between two rounds of equity fundraising, for instance. Beyond our portfolio, well known e-commerce players such as Cuure, Le Beau Thé, Salty, Clever Beauty or Almé are customers of Silvr.
Both Silvr’s founders are well aware of the needs of entrepreneurs. Nima Karimi, CEO, is a serial entrepreneur who has successfully run and sold an array of businesses. Before Silvr, Nima was CEO of Digital & You, after having been CTO of Kanelle Media, and then of MobExplore. Nima is also a business angel and mentor for the IME France, Réseau Entreprendre Paris and Moovjee entrepreneur networks. Gregory Tappero is a seasoned CTO, who has successfully built tech teams at a string of startups. Before Silvr, Gregory was CTO of Chefclub, after having been Engineering VP at PeopleDoc and then founding and selling the edtech startup Tutorsbox. Nima and Greg form a perfect duo and their speed of execution is astonishing. We at XAnge are thrilled and honored to back them on their journey to the RBF European leadership.