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Enterprise Nation


Small business funding: How iwoca is helping eBay businesses maintain cashflow

As we know from Fund101 and the many hundreds of comments it generated, there's an enormous appetite for small amounts of cash among small businesses - whether grants, loans or investment funding. So where can you go? We started putting together a list of funding options a few weeks ago and one name that came up was iwoca, which specialises in lending to eBay sellers.

Iwoca is itself a start-up and you may not have head of them. So here's a little background information about an interesting addition to the small business funding sector. Started by co-founders Christoph Rieche (pictured above) and James Dear in 2011 and trading since March 2012, iwoca is the UK's first finance company dedicated solely to online sellers. Christoph and James are two ex-investment bankers started the business after realising there was an opportunity to cater to the underserved market of small enterprises trading through eBay, Amazon and their own webstore. In particular, the business is targeting enterprises that sell via eBay sellers, an online retail niche which the two founders believe has massive potential for expansion. According to eBay itself, there are 180,000 eBay businesses in the UK and 159 of them have an annual turnover of more than one million. "With access to more capital, this group could easily generate more sales," says chief executive Christoph. "We estimate that at the end of 2011, this group collectively generated revenues of over £7 billion and that by the end of 2016 that number will grow to £16 billion. We're hoping to fuel growth in this sector."

Helping small enterprises maintain cashflow

But it's not just the fact that they exclusively lend to online retailers that sets iwoca apart from traditional lenders - it's the speed with which they make lending decisions and release capital. As Christoph explains, the principle behind their approach is an understanding that online retailers often simply need working capital  - fast turnaround, short-term funding that enables them to purchase stock and keep the business moving. Indeed, the name iwoca itself is a play on 'instant working capital'. By offering quick decisions and access to finance, the company aims to help businesses keep moving and seize opportunities as they arise. "A critical issue for most online sellers is having access to capital", says Christoph, "Cashflow shortages can often arise from the effect of seasonality and the requirement of paying suppliers upfront for inventory. In a competitive space, having quick access to additional funding can give the edge and this is what iwoca is about. "With high street bank lending in decline, obtaining finance from these traditional sources is often not an option as they have a difficulty in making an accurate assessment of these types of businesses," he continues. "But we focus exclusively on online sellers. Unlike banks, we'll consider alternative data sources, such as a seller's overall feedback scores and online trading history. "The speed of our decision-making is quite impressive. Within less than 55 seconds of signing up, applicants know how much and at what terms iwoca may lend to them." Ecommerce is continuing to grow at an incredible rate and offers a great opportunity for small enterprises to occupy market niches without enormous start-up costs or investment in machinery, people or premises. iwoca's own selective approach aims to help fuel the growth in the sector. "We understand that cashflow liquidity is essential for a seller who wants to seize this golden opportunity," stresses Christoph.

Find out more about iwoca

Read more about funding and ecommerce on Enterprise Nation

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