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Being able to find a reliable funding source to help cover cash flow gaps often proves to be the difference between a successful small business, and one that ultimately fails. Especially in the initial stages, before long term revenue streams have been established, access to capital is vital for a business to continue operating.
Fundbox was created to offer a solution to the problem.
Founded in 2012, the company is using data optimization to provide growing ventures with much needed access to funding.Their Co-Founder and CTO Yuval Ariav took the time to answer some of our questions about the main competitive advantages his firm has, along with how he sees both Fundbox and the fintech field developing the in the years to come.
Tell us some of the basic operational benefits of Fundbox
According to a U.S. bank study, 82% of all businesses fail due to poor cash flow management. Fundbox is a flow optimization tool that leverages Big Data analytics, engineering, and predictive modeling that is transforming the massive pain point for small businesses. Fundbox gives small business owners credit-on-demand, embedded directly into its accounting software. This allows them to instantly clear outstanding invoices and render cash flow gaps obsolete without disrupting work flow. Additionally, Fundbox improves business owners’ ability to plan ahead, and eliminates the financial uncertainty associated with having unpaid invoices.
As a service directed primarily towards small businesses, what are some of the main inefficiencies you identified in traditional payments technology which make Fundbox a better alternative?
Small businesses are seeking an efficient way to instantly access capital and close the cash flow gap between accounts receivable and accounts payable. While there are other traditional options available; Fundbox offers a quick, safe, transparent and intuitive service that allows a business owner to re-invest funds directly into any aspect of the business. For example, business credit cards can not cover expenses such as payroll during a cash flow gap; Merchant cash advances typically carry a high APR and are often deducted through customer credit and debit card purchases, which is not applicable for B2B businesses; and bank loans often require a small business to borrow more money than it needs to for longer periods of time, ultimately costing the company significantly more money. Additionally, it takes weeks – months to secure a traditional bank loan.
Fundbox has generated support from a number of high profile investors. For an early stage startup, what insight can you provide in terms of how to best to go about effectively connecting with funding partners?
Investors are looking for innovative solutions to inherently broken, antiquated systems. Early stage startups that clearly and compellingly underscore how their technology is the answer above all others will get strong VC traction.
One of the main benefits of the service is the time a user can save. How much of a difference are we talking about here?
Fundbox’s credit-on-demand is embedded directly into existing accounting software, clearing outstanding invoices without disrupting work flow. In as quickly as 24 hours, a small business owner can access working capital and is able to invest in their business.
When it comes to covering short term funding gaps of the businesses using the service, is the process completely automated, or do you analyze user needs on a case-by-case basis?
The Fundbox risk engine taps into numerous data signals within its network and automatically and instantly assesses customers and invoices for risk. A small business owner can then choose which invoices to clear and do so with a single click. Using data analytics and advanced technology, the Fundbox tool deploys the needed capital that the business owner repays in 12 weekly payments. There is no penalty for early repayment.
Having been founded in 2012, Fundbox has managed to significantly branch out in the finance industry. What have you made of the market’s response to the service so far?
Fundbox’s growth has surged over the past 18 months, surpassing 300% in quarter over quarter growth. This success illustrates how important it is to provide small businesses with credit-on-demand. Fundbox is providing an seamless and intuitive solution to the biggest pain point for SMBs. The market’s response to the service underscores how big a problem cash flow management is for small businesses and how broken the traditional payments system was for this particular sector of the market.
Moving forward, what can our readers expect from Fundbox in the future?
Small businesses have traditionally been under served when it comes to their financial needs. Our product is providing an innovative approach to solving this problem, but it’s also based on the changing ecosystem in which small businesses operate. These changes include: collaboration between service providers, open APIs and more robust sharing of information, machine learning and data science driving decisions, and more. As these changes take place, new opportunities will evolve to solve the challenges small businesses face.