Uster: Invoice funding is cheaper than early customer payment discounts
Steven Uster · FundThrough Hits $240m in Invoices Advanced to 2k+ Founders · Dec 6, 2020 · at 4:51
Steven Uster, co-founder and CEO of FundThrough, compares invoice financing costs to the effective APR of offering discounts to customers for paying early.
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“It is cheaper than giving a discount to your customer to getting paid early.”
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More from Steven Uster
Uster: FundThrough operates with a 100% debt advance rate
“The beauty of a model that we have right now is that we have a hundred percent advance rate. So our cost of debt is actually our total cost of capital.”
FundThrough claims an LTV to CAC ratio of 7x to 9x
“What we'd say is our ratio of LTV to CAC has been quite strong. You know, somewhere in the range of seven to nine.”
FundThrough charges 1% to 2% monthly on invoice advances
“It's typically somewhere in the range of one to two percent a month or one and a half to two percent a month.”
Uster: Early invoice advances were financed at 15% interest or profit shares
“At the time, the debt, well, with no track record and no history I was paying 15%. And for, at some point it was 15%, and for others, it was just a sort of a profit, it was debt, but it was a profit share of what I made by advancing that.”
FundThrough averaged $15 million monthly in invoice advances in 2018
“So now we're last year in 2018, we were doing about fifteen million dollars a month. In advances.”
FundThrough has raised about $15 million in total equity
“So all in, we've raised about fifteen million dollars in equity you know, going from angel seed rounds or seed extension to a seared A and so, and that's been primarily through local Canadian VC firms and high net worth individuals sort of angels call it.”