1. the beginning or creation of something.
Flexible access to working capital is EXACTLY what the global mid-market needs to insure continued growth. Corporate buyers and suppliers are often in need of working capital funding between $1M USD and $50M USD, significantly more than the amounts funders like Kabbage, Fundbox, or Bluevine can typically underwrite and provide.
Financial organizations with larger capacity and more effective large deal underwriting groups exist, but in order to increase deployed capital the traditional working capital and trade finance funders must become much more efficient in each of the steps of the fulfillment process:
Back in the days when I spent my time building companies in the consumer finance space, lenders would focus on one key origination metric – the cost to acquire a new account. In the consumer world, a funder who can acquire accounts at $50 USD has a significant competitive advantage over a competitor who acquires accounts at $100 USD.
Few, if any, of these traditional working capital funders focus on this metric today. Their justification is straightforward; larger deals obviously justify a higher sales and marketing expense. In and of itself, this fact drives funders to the ‘big chunky’ transactions. It also increases competition within the global 2000 for these deals. In short, if it takes $50K USD to close a deal, all things being equal you’d rather have a $100M deployment than a $1M. This phenomenon has the effect of making deployment in the global mid-market inherently less efficient.
This “efficiency deficiency” motivates our TradeRocket team to think about how we can improve the origination process using automation; the net effect being increasing deployed capital for our funder partners at a much lower cost per account.
The top three acquisition channels for working capital finance origination today are:
- Direct Sales - Telemarketing
- Direct Marketing – mail, email, web, and medias
- Channel sales
Direct Sales is still by far the preferred approach for most mid-market lenders, but it also remains the costliest. In addition to sales and marketing expense – legal, compliance, and underwriting outlays can typically push the cost to acquire a new account to well more than $50k.
To that end, TradeRocket is preparing to launch new tools for funders that allow them to reduce account acquisition costs. Additionally, these tools allow for greater retention of new and existing clients, increasing funder profitability.
These tools will allow funders to turn on an origination program in less than 30 days with the goal of full deployment of capital within 60-90 days. Automation that allows for faster and more efficient origination also improves underwriting, funding and servicing, and that is EXACTLY what our new platform allows for.
Keep yourself informed about this transformation of the financial services industry brought about by the development of new automation and technology. If you are a funder targeting deal sizes $1M to $50M USD either in the US or abroad and are looking for a better, faster, cheaper way to acquire and retain new clients, give us a call. Albert Assad, our VP of Business Development (firstname.lastname@example.org or 404-800-5766), can’t wait to tell you about what we’ve got today and what we are building for tomorrow to support the accelerated growth of your originations.