DueCourse, a cloud-based invoice financing service for SMEs, has raised £6.25 million in new funding. Backers include GFC (the venture arm of Rocket Internet), Alex Chesterman (founder and CEO of Zoopla), and Simon Franks (co-founder of Lovefilm, acquired by Amazon). Also noteworthy is that the new capital is a split between £1.25 million of equity and £5 million of debt.
The latter is a reflection of the Manchester, UK company’s business model: it lets small to medium-sized businesses access cash tied up in their yet-to-be-paid invoices. But, rather than operating a peer-to-peer lending marketplace, DueCourse is doing the actual the lending, hence its own debt-financing.
“We allow small businesses using cloud accounting the ability to access the money tied-up in their unpaid invoices whenever they like, in just a few clicks,” explains DueCourse co-founder and CEO Paul Haydock. “The product is free to install, setup takes minutes, and any money requested is then in their bank account within an hour”.
The ability to SMEs invoice financing as such a speedy rate is born out of DueCourse’s use of data and its own risk models. This includes pulling in data from the cloud accounting services it plugs into, which include Xero, SageOne, and FreeAgent.
“The rise of cloud accounting within the SME market over the past few years has enabled us to access real-time accounting information, which we combine with other external sources of data to generate a proprietary risk score for lending to small businesses,” says Haydock.
This then enables the startup to generate a risk score that combined with DueCourse’s “data-driven decision engine” tells businesses (a) whether they are eligible to take advances against invoices and (b) the cost to access the money in tied up in unpaid invoices.
He also says that DueCourse differs from the traditional invoice finance model, which requires an SME to handover all invoices, sign a lengthy contract, “and involves the finance company informing all customers that the SME is in a finance arrangement”.
In contrast, DueCourse is confidential (end customers are never aware a business is using the service). “Businesses can choose how often they use it, and when they use it, whether that’s hiring new people, funding new resources or purchasing equipment,” adds Haydock.
Meanwhile, I’m told that the company plans to raise a Series A round of £10-15 million in the next 10 months to expand its service globally.