When a company raises hundreds of millions of pounds in capital, it is typically a hyper-growth tech startup with several previous funding rounds behind it.
Storfund fits the bill around growth, but bucks that investment trend following its massive £300 million financing deal last year.
“Our ethos was to set up a solid business from the ground up: we didn’t want to be one of those businesses that is reliant on one funding round after the other,” co-founder Akbar Ahsan tells TechBlast.
“We didn’t want to spend our entire lives cap in hand running around investors trying to raise funds. So we deliberately took a more cautious approach in the beginning.”
Storfund was co-founded in 2018 by former investment bankers Ahsan and George Brintalos, friends and former flatmates who met while working at Barclays Capital 20 years ago.
Recognising that eCommerce retailers selling through sites such as Amazon, OnBuy and Fruugo do not receive the cash from sales for weeks – due to a variety of reasons, outlined at the link below – the London startup offers retailers immediate payment on the sales they make, eliminating the long wait for payment which causes a cashflow problem for small businesses.
The business was profitable within its first six months. When specialist FinTech investor Fasanara Capital committed £100m late last year – with a further £200m to follow when Storfund expands into China – it was to fund the fast-growing demand for its services.
“It was difficult in the beginning: for the first year, pre-launch, George and I were bootstrapping the company and weren’t paid. We were paying everybody else’s salaries out of our savings, which naturally made us a bit more cautious,” Ahsan acknowledges.
“However we have the inherent ability to grow very quickly – and that clearly brings along value to the company and to our business model.”
Original idea
Following their time at Barclays Capital, the friends went their own way. “George went on to work for other banks like Credit Suisse and moved to Spain, while I moved with my career to the Middle East and South Africa. But we were always in touch,” says Ahsan.
“George then had a couple of other tech businesses that he ran in the US in San Francisco – and off the back of one of those he had an idea.”
One of these businesses sold apps on mobile app stores. “Apple and Google pay the app developers every 90 days for the downloads, but the app developers have to spend money every day marketing to get their apps in the top five, top 10 download lists. It’s very cash intensive and it kills a lot of businesses,” explains Ahsan.
“His initial idea was: can we do something here to help ease the pain? We figured out that actually the bigger opportunity is in eCommerce marketplaces: there are a lot more people selling and the payment terms are around the same – but the pain is bigger, so we knew the solution would be better received.”
Ahsan spent the first year systematically attending London’s Amazon seller support groups to understand their growth ambitions and financing pain points.
The platform is now Amazon’s only approved global provider of factoring – immediate payment on sales – delivering its service in 17 out of Amazon’s 20 marketplaces. It has also secured partnerships with Cdiscount, France’s largest marketplace; PcComponentes, a leader in Spain; and Back Market, a pioneer in the circular economy.
At the end of a day’s trading, Storfund pays out on 80% of sales immediately. As this is net of sales and returns, it takes into account if a product has been returned and refunded.
Growth during COVID
“As the world went into COVID lockdown, we were in a very bizarre situation because all of a sudden our volumes just started ticking up,” says Ahsan. “The whole world was coming to a standstill and nobody knew what was going on – but we, probably earlier than anybody else, could see eCommerce volumes ticking up.
“However a lot of businesses also hit the wall, so business risks increased as well. We had to spend time making sure we didn’t take on extra risk to the business whilst also trying to maximise the opportunity.”
Brintalos, an economist and engineer, designed the mathematical models behind Storfund and manages its Athens-based engineering team, while Ahsan has taken the lead on business development and customer insight. Its target is to reach £5 billion in annual financing for eCommerce retailers by 2024.
“The main challenges in the beginning were growing this little business in an environment where the goalposts were changing the entire time,” Ahsan says. “It wasn’t an established field or well-trodden path.
“My advice to startup entrepreneurs is: don’t be scared of making mistakes, or trying things out. If they don’t work, they don’t work.”