Uncapped, a London-headquartered and Warsaw-based startup that wants to provide "revenue-based" finance to growing European businesses, is officially launching today and disclosing that it has raised £10 million in funding.
The capital is a mixture of equity funding and debt (money it can use for lending), and sees the fintech company backed by Rocket Internet's Global Founders Capital, White Star Capital and Seedcamp.
I understand a number of angel investors also participated. They include Robert Dighero (partner at Passion Capital), Carlos Gonzalez-Cadenas (COO of GoCardless) and David Nolan and Kevin Glynn (founders of Butternut Box).
Founded by "serial entrepreneur" Asher Ismail (who was most recently CEO of Midrive) and former VC Piotr Pisarz, Uncapped has set out to use various marketing, sales and accounting data to be able to offer finance for young businesses based on their current (and projected) revenue.
Specifically, Uncapped says it will enable founders to access working capital between £10,000 and £1 million for a flat fee of 6%. It's being pitched as a smart alternative for growing companies that don't want to give away equity in return for capital to help grow.
"The first decision that entrepreneurs need to make when raising finance is whether to give away a portion of equity in their company or take on debt," explains Ismail. "Equity is a slow and very expensive way to fund growth, while loans add more risk. We’re creating an alternative that sits between debt and equity financing, while offering the benefits of both. We started Uncapped so that entrepreneurs wouldn’t have to give up a piece of their company or put up their house."
Ismail says that Uncapped provides entrepreneurs with access to capital without the need for "personal guarantees, credit checks, warrants or equity," and promises to move a lot quicker than investors, or for that matter, more traditional forms of debt finance, can.
"We don’t require customers to share any business plans, cap tables or pitch decks," he adds. "All we need is to verify their business performance. We connect to the business’ existing sales and marketing platforms, like Stripe, Shopify and Facebook. Revenue-based finance also gives founders the flexibility to repay less when their sales slow or the market hits a downturn."
The only stipulation is that businesses must be based on online payments and have at least nine months trading history. This makes Uncapped particularly suitable for companies operating e-commerce, SaaS, direct-to-consumer, gaming and app development businesses.
"For example, our first customer was online menswear brand, L’Estrange," Pisarz tells me. "For e-commerce businesses, December is typically the most challenging time to invest in growth, as inventory and marketing costs are at a peak but Christmas sales have not yet come through. We were able to provide the business with an advance within three days."
Meanwhile, Ismail claims that Uncapped is the first company of its kind to launch in Europe (which is somewhat of a stretch) and that venture capital -- although very different -- is probably the closest alternative form of financing.
"Despite the $35 billion invested in Europe by VCs this year, many companies do not fit the venture model," he says. "They might be a family business that doesn’t intend to sell, an entrepreneur focused on more of a niche market or minority who may be overlooked by traditional funders. Whilst VCs will often meet 1,500 companies and back just five of them a year, we have the ability to provide hundreds of businesses with growth capital for a flat fee much faster and without sacrificing equity at an early stage."