Leverage your data to access capital
Many tech-enabled businesses can be started with little to no physical equipment, in this post we’ll cover SaaS & e-Commerce companies. Although the lack of physical assets can be cost-effective in the short term, it can make it difficult to get funding from a financier. These assets are often a source of collateral for lenders in case of a default.
Many traditional banks and lenders are still tied to this traditional form of collateral. However, some lenders are willing to lend to tech-enabled businesses based on their data.
Let’s cover E-commerce:
The revenue generated from each digital channel used as an e-commerce company is an asset-like structure for some financiers.
Digital marketing analysis makes it simple to run data analysis on how much funding is necessary. Analyzing Return On Ad Spend (ROAS) is a valuable KPI for evaluating customer acquisition. ROAS shows how many dollars per dollar spent on advertisements (calculated as revenue/advertising costs) you can expect to generate. It’s a simple metric some financiers use to see if there’s enough return for an investment. ROAS may fluctuate so financiers may start lending and through smaller amounts of capital as the channels mature.
SaaS companies can also leverage KPIs to access MRR Lines of Credit through their sales efficiencies. Firms leverage those metrics to find security that their investments will allow growth in the business. There are many KPIs that can be tracked, and financiers will often look at a combination of multiple data points to assess the sales performance.
The longer the company has been in business, the more accurate the data will be to predict future expectations.