Today we’re announcing Jeeves Growth, a new product that provides revenue based financing solutions to companies across the globe. This new product leverages our infrastructure and platform to provide longer term financing options to startups and SMEs on top of our cards and revolving credit lines.
Jeeves Growth allows startups and SMEs to scale faster with easy to access non-dilutive capital in their local currency. We’re extremely excited about opening up a whole new asset class for startups and SMEs globally who now have access to better, cheaper, and more scalable financing to grow their businesses!
In the last decade, we’ve seen the equity capital markets not only explode in size, but also drastically improve with the ease in which it has become available. This has been especially true in the US, and is now starting to 🔥 up in international markets as well. Debt capital markets have lagged equity markets and remain an extremely hard financing instrument to reach for startups and SMEs. This is even more pronounced in non-US markets, where lenders and providers are few and far in between and have very stringent requirements and extremely prohibitive credit boxes.
The time to open-up debt capital markets for 🌎 startups is now, and Jeeves is excited to be leading the charge.
“Jeeves Growth allowed me to scale my business faster than ever before. My growth rate soared by getting capital today for my contracts. Everything was fast and seamless. They set me up for long term success.” Alex Clapp — COO @ Moons
Over the last 10 years the equity markets have evolved greatly to make it easier for companies of all shapes and sizes to raise capital. The public markets have enjoyed an incredible decade of growth and value creation never seen before while private markets have evolved ever so drastically. Beyond the obvious growth in venture funding and higher valuations, the power in private markets has shifted from investors (those with capital) to founders and operators (those needing the capital). The influx of capital from diverse sources have helped to amplify this shift. Namely we’ve seen the entrance of sovereign wealth funds, hedge funds opening up venture practices, and the rise of solo capitalist funds. In most recent years the trends around rolling funds, syndicates, and the relaxing of Regulation CF has allowed virtually everyone to be an 😇 investor. As a result, founders have even more places to raise equity to capitalize their startups.
While the explosion of readily available equity capital has been most pronounced in the US — these trends are coming to other parts of the world as well. Europe has always been a distant second to the 🇺🇸 in terms of venture capital activity but is now starting to produce massive companies and huge outcomes. Latin America (LATAM) is in full explosion with the ecosystem of entrepreneurs and investors exponentially growing every week. South East Asia continues to show an acceleration in velocity of investments and markets like India (🇮🇳) and Pakistan (🇵🇰) are currently experiencing their own booms in entrepreneurship. Africa and Australia which have historically been lagging other parts of the world are also rapidly digitizing and producing big venture backed winners. Across the world equity is becoming more easy to access for new companies.
For founders and startups, these improvements in the equity capital markets are welcome changes. There are now many 🚪 to knock on and many different avenues to pursue to get your company off the ground. However, the cost associated with an equity raise still remains relatively high. With rising valuations come ballooning round sizes as investors still have their ownership thresholds to maintain.
The real innovation and opportunity comes by being able to reduce the cost of funding your company. As all accounting and finance professionals will tell you.. the cost of equity is always higher than the cost of debt..
Debt capital has always been the harder market to access as a startup or SME. After all, debt lenders are underwriting companies to protect their downside vs. optimizing for the upside like equity investors. The heightened level of risk at the early stages and low survival rate of startups means that debt lenders have to take on a lot more risk, as such, most wait for companies to mature. For those that dare to underwrite the early stage companies they must price their debt instruments higher to offset for losses. Lenders also ask for a multitude of covenants, offer capital in tranches with predefined milestones, take at least 6 months to close and on top of this ask for equity in the form of warrants!
Debt capital markets have therefore been hard to crack for startups given their complexity compared to equity and their relatively high price of entry.
More recently the US debt capital markets have started to open up to earlier stages of startups and smaller SMBs. Digital lenders and getting access to alternative data have brought down the cost of underwriting meaning lenders can acquire customers online at lower costs and start to issue loans faster than the half-year cycle that currently exists. Traditional venture debt providers also now understand that to compete for the 🦄 of tomorrow you have to start much earlier. But this is a very 🇺🇸 centric view of the world. In international markets it remains virtually impossible to raise venture debt at the early stages of building a company. The debt providers simply won’t talk to startups and the ones that are will be offering terms and conditions that can crumble companies.
We believe that debt capital markets will play an increasingly important role in the funding of startups in the future. Given the structural benefits of accessing debt capital and the fundamental lower cost than equity, startups want to get access to debt capital markets.
Jeeves Growth unlocks 🔑🔒 this whole new asset class and new form of capitalization structure for startups. It allows founders to give up less dilution in their equity rounds given the additional runway and capital they get to execute on.
Jeeves Growth allows equity rounds to become easier for founders as they can come into a fundraise with stronger metrics, faster growth, and alternative solutions to equity investors. It introduces flexibility into a cap table that was never before possible and will continue to give founders and SMEs more power and agency. This is all the more important for international and global startups where the access to equity and debt capital is more capped and less readily available.
“Getting access to debt financing is one of the most time consuming processes to go through. We wanted to leverage our recurrent revenue model and use the advance cash to increase our marketing spend. Jeeves wired me money for my contracts in days, no fine print, and I was able to keep scaling the business without distractions. Oh and I gave up no dilution!” Maya Dadoo — CEO @ Worky
With our platform, technology, and the prevalence of data, we can now underwrite companies as fast if not faster than equity investors ⚡️. The capital that Jeeves Growth unlocks is a direct function of the annualized revenue that companies will generate. Our proprietary underwriting platform helps us to understand how revenue behaves and allows us to give customers access to that capital today. And most importantly, we’re structuring these revenue-based lines to work seamlessly with how our customers are generating revenue. As your customers pay you, you pay us back. It introduces maximum flexibility in the repayment structure. What Jeeves Growth also allows is for lines to dynamically adjust 📈 proportionally with our customer’s growth: as they generate more revenue they can get access to larger lines.
Since our beta launch 3 weeks ago, we’ve been running a closed beta with 20–30 companies and can issue the capital in the local currency of our customers with no FX fees. Jeeves Growth is currently live in 4 countries: Mexico (🇲🇽), Colombia (🇨🇴), USA (🇺🇸), Canada (🇨🇦)
At Jeeves we’re passionate about building financial services and tools to help international and global teams grow and scale. We are building the most flexible and advanced financial infrastructure platform for companies of all shapes and sizes to access better payments, faster credit, and more flexible capital. We’re obsessed with being the capital provider for the next wave of global companies and enable them to scale faster than ever before. 🚀