Company Details
Boulder, Colorado
Founded: 2014
Privately owned
Employees: 4 full-time, 4 interns
Founder and CEO Sean De Clercq is taking crowdfunding to new levels by financing production runs for growing companies.
Crowdfunding may help startups get their first order going. But what happens after that initial product launch? Platforms like Kickstarter and IndieGoGo will only allow companies to fund the first version of a product.
New and even established companies can struggle to get financing for second, third and even fourth production runs of a product. That's where the newly launched Kickfurther marketplace comes in, it harnesses crowdfunding to finance product manufacturing for growing companies.
With a familial background in merchandising, De Clercq encountered firsthand how difficult it can be to get product to market for starting or upcoming companies. "We found that a lot of crowdfunded companies don't have a lot of resources after a crowdfunding campaign," he says. "You have to pay suppliers upfront then it takes months to get paid for the product you delivered. It creates this cash flow pinch that a lot of high growth companies struggle with."
His sister was using Kickstarter to fund one of her projects and he thought: "Why not use Kickstarter's platform and turn it toward inventory, so businesses can get that inventory they need to continue growth and drive revenue for their business," De Clercq explains. "At the same time they can preserve their liquidity and cash reserves to drive business growth."
So De Clercq started Kickfurther. A platform that allows companies to seek financing to produce the same SKU (stock-keeping unit) over and over. "There are a lot of brands that have one product selling but really have a problem deploying another SKU. So we can serve those kinds of companies," he says. "We can work with much smaller companies that are left in the dust by traditional financing solutions." After all a bank won't want to issue a business loan for a couple thousand dollars to support just one or two production runs of a product.
Since launching in late 2014, the Kickfurther marketplace has funded production runs for 60 companies via the crowd. It's helped Colorado-based companies like CO.Alition (a pack company), American Dog (a maker of dog toys) and Brute Force (a manufacturer of exercise gear). Its largest raise has been the $51,544.62 the crowd funded for an AllergEase Lozenge Production Run.
Companies set the terms of an offer, but De Clercq gives an example of an offer: "We had an offer that was for 4 percent paid in an estimated 3 months. We call that an annualized 16 percent rate -- 4 percent every three months is 16 percent a year," De Clercq explains. Each offer on Kickfurther includes a 3.5 percent payment to the marketplace and investors pay 1.5 percent to withdrawal from their fund. They can reinvest at no cost.
Thus far the approach has proven popular with Kickfurther's clients. De Clercq says roughly 95 percent of investors reinvested. Similarly companies are using the platform for repeat product runs. One has already made four offers on the fledgling marketplace. Before a company can make a new offer on the marketplace it has to complete obligations on the previous offer, he explains.
The marketplace began 2015 facilitating about $10,000 in offers in January. Within the first few months of the year it was facilitating $30,000 a month. De Clercq anticipates facilitating $1 million in offers on a monthly basis by the end of 2015.
Challenges: "Finding companies looking for people to fund inventory on one end and on the other end finding those people who have capital available to fund inventory," De Clercq says.
Opportunities: "Being first to market with something unique," De Clercq contends. "The user base has grown to a point where we can start working with bigger deals and more qualified companies."
Needs: "Improving quality deal flows," De Clercq asserts. "Getting the exposure and getting the word out about Kickfurther."
