Marketinvoice: Anil Stocker and Charles Delingpole
Age: 27 and 28
Company name: Marketinvoice
Date started: July 2010
Staff numbers: Six
Tell us what your business does:
Marketinvoice is an online marketplace for invoices. Small companies can sell invoices due from large corporates due in 30, 60 or 90 days to a network of investors.
It’s the first marketplace of its kind in Europe, and is a solution to the problem of small companies trapped in a “double credit crunch” between banks who won’t extend overdrafts and their large customers who delay payment for long periods of time.
Where did the idea for your business come from?
Anil: Having been involved in small business working capital for quite a long time, I always thought of invoice finance as a very useful tool with a negative reputation – due to personal guarantees, lock-in periods, monthly service fees etc.
With all of this in mind, I looked at what else was developing in the market, including the Receivables Exchange.
My business partner and I asked ourselves, why couldn’t this work in the UK? A lot more people here are aware of what factoring is, so we have the opportunity to educate those people as to how different we can be.
What were you doing before starting up?
Anil: I studied economics at Cambridge University, where I met Charles my business partner. My background is in the private equity industry, first at Lehman Brothers Private Equity Group and later at the investment bank Cogent Partners.
I spent a lot of time looking at middle market companies and family run businesses in the UK and Western Europe, always with a focus on working capital.
Charles: I previously worked in investment banking with technology, media and internet companies from a mergers and acquisitions perspective. I studied politics at Cambridge.
I also founded a company called Acumen PI, which owns the world’s largest student discussion forum, with four million views per month, TheStudentRoom.
We both gave up promising and financially rewarding careers to pursue this opportunity, as we really saw a great opportunity to make a difference for small and medium businesses.
Where is your business based?
We are currently based in Old Street, London – an area that is increasingly becoming known as Silicon Roundabout.
What advice would you give to budding entrepreneurs?
According to Ronald Cohen: “Start young, think big, and stick with it”.
What about staff?
There are six of us currently. The market for software developers is particularly tight at the moment and it is hard to find good people.
How have you promoted your business?
According to the Danish entrepreneur Morten Lund, “Marketing is like sex – in the future, only losers will pay for it”. The internet is developing into a great way to market your business. Offline advertising is expensive and its effectiveness is often difficult to measure.
How much do you charge?
At present we charge all companies selling invoices on the platform 0.5% of the invoice face value. This seems like a reasonable fee, but is open to adjustment in the future.
What has your growth been like?
We have made significant progress in a short period of time. Because of the significant size of the market, we envisage investing very heavily in the company rather than breaking even quickly.
What planning did you do before you started up?
Having a group of 10 shareholders all with significant experience, meant that we had a great sounding board for potential ideas.
We put together a very comprehensive business plan. This included detailed financial projections, granular analysis of the potential market size and a lot of assumptions which have shifted a great deal.
How did you raise the money?
Before we began Marketinvoice we looked at several different start-up opportunities, and undertook significant research.
We are fortunate that we come from the investment world and were able to put together a group of 10 investors (angels, former work colleagues and friends) who were willing to fund our new concept. This process began in May 2010 and does take significant time and energy.
We had to take care to present our business plan in full detail and answer lots of questions from our prospective investors. Certain investors don’t like investing in start-ups and declined, but that is all part of the fundraising rollercoaster!
Where do you want to be in five years’ time?
We need to see how the business will develop. We appreciate that the business will take time to scale.
Platforms like ours will not scale overnight – it’s hard work, and takes time, but, in ten years’ time, the invoice finance industry could look very different to how it does today. Hopefully small businesses will be more in the driver’s seat!