iwoca, a London-based startup that provides online retailers with instant loans for working capital, recently raised £2m in funding (read here). As I covered the deal, I got curious about their solution and asked CEO Christoph Rieche to answer my questions. He joined us and unveiled some interesting insights about this venture.
FinSMEs: Hello Christoph, thank you for joining us. First, can you tell us a little bit more about you?
Christoph: Sure. I was always very much intrigued by starting my own business. After 7 years at Goldman Sachs I felt I was more than ready for this challenge – aged 31, it was now or never. And I was right, the last 18 months have been the most exciting time of my life.
FinSMEs: Let’s speak about iwoca…How did you come up with the idea?
Christoph: I wanted to start a technology company, remain in the financial sector and work with small and fast growing businesses. iwoca combines all of this. We are a tech company at heart that provides small business loans to successful eBay and Amazon sellers. This idea ticked all boxes.
FinSMEs: Tell me something more. How does it work?
Christoph: It’s really simple. There are 180,000 businesses trading on eBay. They can sign up on our website, we then review their sales across their eBay, Amazon webstores, screen the feedback they receive from their customers, look at how they engage with their buyers via Facebook or Twitter and finally combine all of this information with their credit history. Within seconds from sign up we know if a business is eligible for a small business loan or not and if yes for how much. Finance can really be as simple as that. However, we love to speak to our customers. We always make a call before we lend to them to hear a bit more about how they set up their business and what they want to achieve. We do not just give finance, we want to be a long term partner.
FinSMEs: What’s your business model?
Christoph: Our model is based on the success of our customers. We provide them with growth capital in form of business loans. Very often customers that come to us make profit margins of in excess of 50% on lucrative deals. But they need the capital upfront – that’s where we come in.
FinSMEs: Could you introduce us to the other team members?
Christoph: Without our team we would not be where we are today. The majority joined straight from University – they are full of ideas and motivation. This keeps the brand young and fresh. Until recently I was the oldest in the office!
FinSMEs: You just raised funds. Was it difficult to close the round?
Christoph: We closed two funding rounds last year – it’s always taking twice as much time as you initially think and a real pain to get done – but if it was any different where would be the challenge? We are fortunate to be backed by a great team of angels and industry specialists, that really helps.
FinSMEs:…How are you using the funds?
Christoph: The majority of the funds is going into loans for eBay businesses, the remainder into our operations. Oh, and then of course the occasional round of kebabs and beers for the team.
Christoph: We have very ambitious growth targets that keep us up at night. We aspire to become the JP Morgan of the 21st century – the landscape is changing and there are millions of fast growing e-commerce businesses around the globe that require a different service than traditional finance institutions can provide. We are a tech company at heart and provide the financial services they need – our DNA is much more aligned with this new world.