Business
Alternative Financing And Why Equity Financing Has Lost Its Luste
Niche, Vertical-Focused Invoice Factoring & Cash Flow Financing
One of the oldest forms of financial engineering, invoice factoring, has been revolutionized over the past decade, becoming a bespoke solution for the most niche of use cases in the past five. Put simply, invoice factoring is when a business sells its receivables (invoices) to a third party (factor) at a discount to access immediate cash flow. The invoice is then collected in full by the factor (discount + fee) when it comes due.
So, what is the catalyst driving adoption of this solution? Traditionally a resource intensive process (paper invoices are cumbersome), factoring now utilizes software to ingest sales data and verify invoices. The speed at which invoices can be converted into cash flow has reduced SMBs’ reliance on VC and bank debt to manage working capital and, more specifically, scale growth.
With invoice factoring and accounts receivable financing, businesses can avoid long payment cycles, collecting and reinvesting money earned almost immediately. Traditionally, industries selling big ticket items and hard assets (industrials, machinery, transportation, etc) have been plagued with notoriously long net payment terms, but often for good reason, as large purchase orders involve many moving parts and take months or years to fulfill. What’s baffling, however, is that these restrictive payment cycles exist within startup-centric industries like software where sales and payments occur in real-time.
Current payment tech has opened up a world of opportunity for frictionless, crossborder, near instant transactions. Consumers can pay, receive, and transfer funds across accounts and between individuals with the tap of a button. Businesses can move huge sums of money around the world denominated in one currency to be received in another within minutes. A glaring incongruity exists between capability and implementation/adoption by the biggest companies around the world, often without merit or justification. Fortunately, capital providers have taken notice and have structured factoring and AR financing solutions that run the gamut of possible use cases. Have digital verification that a counterparty owes you money at a future date? You’re in luck—there’s undoubtedly a niche alt financing shop that will provide you with immediate liquidity
While founders often shudder at the idea of taking a haircut on money they’ve already earned just to get it faster, in reality, it’s one of the most efficient, and often cheapest methods of boosting cash flow without having to give up a chunk of precious equity or relinquish your firstborn as collateral for a bank loan. For revenue-generating startups with a reliable, consistently profitable acquisition strategy, taking a discount of 50-200bps on accrued receivables for a source of short-term working capital is a viable alternative for growth financing. The proof is in the pudding: C2FO, Fundbox and Bluevine have raised hundreds of millions to turn SMB invoices into cash. FastPay, Braavo, and Qwil combat the needlessly long payment terms of digital media titans like Apple, Google, and mobile ad networks to fuel the growth of app developers, who ironically achieve this growth by reinvesting all profits into ads served by these same companies. Payability factors sales for Amazon merchants so they can stock up on new inventory; Lighter Capital finances current and future receivables tied to subscription-based business models. The list goes on.
Yes, you read that right.
If there’s anything the pandemic taught us, it’s that the paradigm of “office” and “workspace” has been shaken to its CORE.
Universities are teaching via Zoom, court dates are done virtually, FULLY REMOTE businesses are valued at $1B+, and legitimate Inc. 5000 startups are run from…wherever. 📲
This is my office for the day…
I am actually running our business from the beach, typing this from here.
It’s 4:28 pm CET, which means it’s 10:28 am EST and I am CRUSHING my to-do list.
(And the team will continue to crush it while I’m asleep. That’s the 🗝)
So how did we get here?
We launched NYCE and our mission to create 100,000 millionaires in March, 2020…just as the global COVID-19 lockdown happened. 😳
As a result, we shut down our main office and set EVERYTHING up to run remotely…
SMOOTHLY! And a system that allows us to outperform competition by 200%. (You can build this system, too. More on this in a second.)
Here’s what we were able to do since then:
- Gained 6M+ followers across all platforms 📈
- Add 1500+ new apartments to the portfolio 🤑
- Grow to $300M in real estate 🚀
- 105% investor returns 🎉
- 700K+ community members 🤝
And here’s the best part…
Having team members in all the main time zones gives us a 24-hour work cycle vs. 9-5/eight-hour on-the-clock performance.
This means we get 3x the productivity of a similar company. 🔥
Let me repeat that…3x PRODUCTIVITY vs. our competitors.
Meanwhile our project management software grants us 24-hour TEAM-WIDE connectivity that tracks all tasks and lets us know if productivity dips even a little bit.
There is ALWAYS someone senior awake. It could be Martin in Barcelona…Nat in New York…Vineet & Arif in New Delhi.
All the while giving YOU GUYS wealth hacks and daily content. 🔥
OK, so how can you do it?!
Well, the first step is to have an actual side hustle you’re launching. Not just an idea, a validated business.
MAJOR KEY: Do NOT spend money until you’ve made your FIRST DOLLAR! 🗝🗝🗝🗝
(You can catch a replay Business Launch masterclass here and see TRIBE member Nessa launched her business on the spot and got her first $45K client shortly after.)
One of the easiest ways to start is with Airbnb—you can start that in 10 minutes. Literally. (Here’s a guide if you need it.)
Once you have your business, you build a virtual infrastructure (you really just need two softwares, which are FREE), manage the team accordingly and run the business from there.
I’m gonna put together a step-by-step video breakdown this weekend inside the new TRIBE U on the FIVE key things you need to do this for YOURSELF. 💵 💎
From what software to use, how to build a team, how to keep.
In the meantime, drop a comment if you’re ready to build some wealth and any questions if you want more…
Let’s get to work. 🙌
PS: If you can’t be bothered with video and just wanna get to work, we’re hosting a TRIBE U workshop that will help you get this process started on the spot. It’s $479 $49. 🔥
Investor and popular Instagram influencer Philip Michael says new fintechs need to take greater responsibility for their younger traders.
“Promoting financial literacy is a must, but encouraging risky gambling is reckless,” Philip Michael, NYCE CEO, says.
In 2020, a 20-year-old Robinhood trader killed himself after engaging in risky options trading and seeing his balance $730,000 in the red, leading to a wrongful death lawsuit against the investment app.
“The main apps onboard as many new users as humanly possible, but there’s really no educational process,” Michael says, “and these first-time investors are left to figure things out on their own.”
NYCE—a fintech focused on creating wealth for minorities—wants to create 100,000 millionaires through real estate investments and wealth education.
Through its app, investors can own shares in apartment complexes for as little as $100.
Since launching, NYCE has set records for most new first-time BIPOC real estate owners, buying over 1500 apartments in the pandemic and splitting ownership with its investor crowd.
Once investors are in, NYCE automatically enrolls investors in an online wealth academy (TRIBE) that teaches basic wealth principles, responsible investing and how to spot irregular fads like altcoins and meme stocks.
“Becoming a millionaire is a function of time and habit, not luck and one-time scores,” Michael says. “The micro-investments are really just the gateway drug to that wealth mindset.”
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