If there is one thing that saved retail in 2020, it was eCommerce. Consumers trapped in their homes, with time on their hands, came to depend on businesses that could keep them connected with the outside world. Companies that could keep up with demand were able to survive in ways unfathomable even 15 years ago. Unfortunately not every retailer and manufacturer has the crucial capital needed to reinvest in additional inventory.
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Kickfurther, the first crowdfunded inventory funding platform, (who last month announced a $5.9M Seed Plus funding round) provides mid-sized product entrepreneurs access to capital they need by allowing them to participate on its web-based crowdfunding platform. Businesses can let Kickfurther users know they need funding for specific inventory and will provide profit to users as the funded inventory sells. The users can review the business, the inventory being funded and decide whether or not to participate. Users who provide funding then own a specific lot of inventory.
Once the inventory is sold, they receive the amount they contributed to purchase the inventory, plus the predetermined profit. The process of being approved to launch a deal, which Kickfurther calls “Consignment Opportunities” or “Co-Ops” for short, on the platform and securing funding can take days, not months as it can take with banks.
Big Banks Lend to Big Customers
By current estimates the reality is that over 80% of small business owners are denied financing from banks, both big and small. The transition from personal and family loans to bank loans is when most businesses fail. In fact, securing the first $10K can be as difficult as the first $10M if you have no collateral or history with a bank and particularly if your business is under two years old.
There are a handful of platforms that lend to small businesses, but CEO Sean De Clercq felt the options were limited and underwhelming and there was a better path forward. Sean set out to democratize access to inventory funding and Kickfurther was born.
“Our sweet spot is US-based, high-growth product entrepreneurs, with more than $150K in annual revenue, that are looking to rapidly scale their sales. It has been six years now and we’ve deployed over $75M in inventory funding across 900 Co-Ops.” Many of Kickfurther’s funded businesses credit their success to the platform.
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Crucial Funding Makes for Fast-Growing Companies
A great example of a company that has thrived on Kickfurther is New Jersey-based Bright Stripes. Bright Stripes, creators of fun, creative, DIY and crafts kits for kids, launched their products in the summer of 2019. After working together for a decade at a premier arts and crafts company, the founders Sabre Mrkva and Eric von Stein decided to create their dream business. They approached factories they had worked with, which were thrilled to partner with them and gave them great terms. However, they soon discovered that funding through banks was nearly impossible for new businesses.
According to Eric, “After starting out as a self-funded small business, we found that additional capital was needed to finance purchase orders. It can take several months from production to retailer payment, even with large purchase orders. Cash flow was a real issue.”
They met the Kickfurther team at their first NY Toy Fair. Sabre and Eric describe Kickfurther as “integral” to their growth and after four successful Kickfurther campaigns and $375K dollars funded, you can see why.
The Bright Stripes team was just launching when the pandemic started. In addition to figuring out dropshipping and how to partner with small retailers for curbside pick-up, they also had to figure out financing. The price of ocean freight was rising as demand for space on vessels was tight and time became increasingly important. It was crucial for the business to be able to adequately forecast demand and fund the manufacturing of their products in order to keep their retail relationships on good terms.
Each of the four Co-Ops Bright Stripes funded with Kickfurther took fewer than four days and allowed their relationships with retailers to continue to flourish. Bright Stripes has seen their sales triple year over year, growth they can support thanks to their supporters on the Kickfurther platform. They now have a chief operating officer, two vice presidents of sales and, in less than three years from their first day in business, you will find their LED Candle Critter Unicorn on the shelves at Target. Perhaps most important to Sabre and Eric, when customers purchase anything from their iHeartArt line, 5% goes to the Art Feeds International Program, a partnership they hope to grow as the company expands.
According to a new report from eMarketer, retail e-commerce sales in the U.S. will increase by 13.7% to approximately $909 billion and mobile commerce is expected to grow 72% in 2021. What does that mean for sellers like Sabre and Eric, business leaders like Sean, and for the savvy buyers who fund the Kickfurther platform? Safe to say that all systems are a go.
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