Manchester-based DueCourse broke the record for securing £6.25 million of investment in its latest round of funding; the largest investment seen outside of London for a fintech company.
The round includes £1.25 million of equity and £5 million of debt for lending to UK SMEs. New backers include the founders and investors of Zoopla, LoveFilm, TransferWise and LinkedIn.
According to the company, the SME business lending market in the UK is steadily growing sector, having lent an estimated £53 billion in 2014.
At a time when traditional lenders such as banks showed a reluctance to lend to SMEs, invoice financing in the UK has risen 63 per cent in the first quarter of 2016 to £711 million, compared to the same period in 2015 when this figure stood at £435 million.
DueCourse’s software unlocks the cash tied up in unpaid invoices, giving SMEs control over their cash flow and empowering them to meet their ambitions.
Cash flow mismanagement is the number one problem forcing the hand of thousands of SMEs to shut down. Figures from the Association for Asset Based Finance (ABFA) show that businesses with a turnover of under £1 million wait on average 72 days to be paid by suppliers and, according to Santander, 46 per cent of businesses report being hit by at least one recent cash flow setback, an issue stemming from an insidious culture of late payment across the UK.
Even Small Business Minister, Margot James sees late payment as the scourge of the business ecosystem, noting that there are still too many business owners across the country who have not been paid on time by their customers.
While the minister reaffirmed the government’s commitment towards implementing the Prompt Payment Code last week, companies like DueCourse are tackling the issue from the other end: providing small businesses with temporary funds between payments, based on their invoices.
Aimed at small businesses who regularly invoice clients, the free software links to a company’s online accounting platform and uses it’s proprietary risk engine to assess which invoices are eligible for a cash advance. Once an advance has been requested, the money reaches the customer’s account in a matter of hours, instead of weeks as per the traditional model.
Paul Haydock, CEO and co-founder of DueCourse, graduated from the University of Cambridge with a first degree in engineering before going on to start his own successful business, myparceldelivery.com at the age of 24 and winning the EY Digital Entrepreneur of the Year award in 2011.
Paul then successfully exited the business in 2013 before going on to found DueCourse in 2014 with the aim of empowering SMEs to take control of their cash flow.
“We started DueCourse because we realised traditional methods of finance are completely out of sync with what today’s SMEs need. We saw the opportunity for a company to disrupt the market and help SMEs get access to the cash they need to fuel their business, in real time,” he said.
“We want to be seen as a new kind of cash flow utility – once a business has linked their accounting package for free, DueCourse is simply there in the background for them to access the money in their unpaid invoices whenever they need it.”
Launched in 2015, the business has already grown, retaining 80 per cent of its small business customers. DueCourse is planning to raise a further Series A round of £10 to £15 million in funding over the next 10 months to expand its service around the world.
Haydock added, “This extended angel round of investment was actually oversubscribed, which highlights just how much interest there is among investors around our scalable, data-led technology and its application around the world. The funding is a great boost for the company and will help us go from strength to strength as we continue to expand and improve our software.”