Our thesis and insights
Why we invested: Uncapped
September 23rd - 2020
How an online business is able to cope with acceleration often defines success from failure. How many fashion brands have we seen lose out on growth because they were not able to finance their inventory during a demand peak over Black Friday or Christmas? How many online games have never gone mainstream because they could not afford ‘blitz marketing’ campaigns to build on initial momentum?
Being successful in a high growth environment has as much to do with optimized operations as with having the right financial resources at hand, at the right time. And on the latter, young companies are underserved by financial partners that typically underwrite them ‘post-success’, but not before growth happens (and thus can’t really support those businesses through their growth, let alone ‘hyperbolic growth’ or ‘demand preparation growth’ phases, nor adapt their customer service model at the same pace as growth unveils). This is even more acute in the new economy, where the novelty of the businesses carried out by those entrepreneurs and the lack of physical assets on start-up balance sheets add to other underwriting complexities.
As a result, entrepreneurs are often left alone to buffer-up resources in case the sought-after ‘hockey stick’ happens, by fear of leaving revenue/growth/enterprise value on the table (and at the same time annoying eager early adopter customers who are left unattended). And options are scarce: lacking access to traditional debt, they are often left only with venture capital money, which turns the ‘eventuality of growth’ they are really planning for into a very prevision exercise in terms of dilution and corporate politics (especially if such eventuality ends up not happening as planned…).
Entrepreneurs in the audience: introducing Uncapped, the fair, ‘third way’ financing solution. Uncapped does not bite into your cap table. Uncapped gets repaid out of your revenue flows, so it adapts to realized growth as opposed to be a debt burden ahead of cash flows coming in. Uncapped is (really!) fast, so you don’t need to take your foot off the pedal to find other financing alternatives. Uncapped is right for you if venture money is not. Uncapped is built by an entrepreneur and a venture capitalist (marriage made in hell!), so ‘dog food’ is served, and the future product evolution is that of founders well connected in the community who have seen the problem first-hand.
Uncapped is not only great for entrepreneurs, but also for investors, and for similar reasons: with Uncapped, you can support your start-up’s growth up to your revenue targets without the need to raise money too early, protecting your hard negotiated terms for some more time while you see your company’s valuation skyrocket. So, oyez oyez VCs with investments in gaming, ecommerce, marketplaces and others: reach out to see how your companies can also work with Uncapped.
So, very excited to have partnered with Asher and Piotr. Kudos to them for a ‘fully 100% lockdown’ deal! I guess that, when you have seen the problem from the other side (talking about myself now) and you run into the exceptional talent of Piotr and Asher, turning the ‘marriage in hell’ into a ‘ménage a trois’ is a no brainer!
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