Why We Launched Forward Advances

We’ve always considered ourselves to be in the ‘entrepreneur services’ business. We work for entrepreneurs and try to solve their problems. Currently, we solve for founders being able to access early-stage startup capital, in the form of making equity investments of between £300k-$2m, and we help with building and scaling products through our in-house FP Studio. For the last 3 months we’ve been working on expanding our portfolio of services, and building a product that solves for a 3rd problem - the challenge of accessing growth capital.

We’re proud to announce the launch of Forward Advances.

Screenshot 2020-04-23 at 10.50.44.png

The first VC to launch revenue-based finance

Forward Advances provides growth capital at startup speed, in return for a 6% flat fee. Repayments are taken as a small percentage of monthly revenue, to protect founders from having large outgoings during tough times - slow months mean smaller payments.

(More via Tech Crunch)

Accessing capital is stressful, lengthy, costly and dilutive

For startups who are not running the venture race or for VC-backed startups that need to boost growth in-between rounds, the viable options for accessing capital are slim. In speaking to over 20 founders, we unearthed that accessing growth capital is lengthy, costly, dilutive, stressful or a combination of all four.

Traditional loans can take weeks to clear, and more often than not require personal warranties and high-interest rates. And if the founder doesn’t want to give away any more of their company, traditional equity investors aren't a viable option either. This leaves a large proportion of startups in a bind - they either have to grow slower than they know they can, or opt for a sub-optimal funding solution.

Screenshot 2020-04-23 at 11.10.29.png

A new way to access capital

Unlike traditional venture capital or standard bank loans, a Forward Advance unlocks a novel way for founders to finance their marketing spend without giving up equity, or having to commit to personal warranties.

Fundamentally, we at Forward Partners believe that it's our job is to support entrepreneurs to achieve their potential. Cash advances avoid many of the problems of taking VC funding, such as giving up equity and control as well as the time and stress involved in fundraising.

In addition, we’ve seen that 20-50% of equity investment into B2C businesses is used to fund marketing and giving away equity to finance short term growth isn’t in the best interests of founders. A marketing advance could help founders make their equity go further and achieve a better outcome for themselves (and their early investors).

Because of these advantages, we think that marketing advances will definitely have a place in the funding mix for founders going forward (read my colleague Matt Bradley’s thoughts about this in Sifted) and we’re excited to provide it.

We’ve always done VC differently

Since we got started back in 2014, we’ve been different from other VCs. We’re the only UK VC to operate our studio model and by running initiatives like the Founders Programme, Office Hours and The Path Forward we endeavour to provide as much support as possible to founders, in addition to capital. The launch of Forward Advances is a great example of our drive to move venture capital from a single product to a broad entrepreneur services mentality.

In addition, Forward Advances gave us the perfect opportunity to eat our own dogfood, using our studio team to build a business from scratch, just like the pre-seed entrepreneurs we work with. Also, founders can benefit from the hands-on expertise of the studio team to help them grow more effectively, allowing us to support them in a way that other players in the space can’t match. Great entrepreneurs know that access to the right talent is important as cash to drive growth and happily we can provide both.

In addition, we’ve been investing in ecommerce and marketplaces for the past six year, having invested in companies such as Patch, Spoke and Koru Kids. We know the space and the expertise we’ve built helps us identify the right companies to work with.

What does this mean going forward

The launch of Forward Advances won’t change our focus on providing equity funding to entrepreneurs looking to build category leading companies so expect to see us continue making investments and working with our portfolio companies. That said, Forward Advances helps us to support a wider set of entrepreneurs that are working hard to build game-changing businesses, and for us that will always be a win.

Luke joined Forward Partners from REV Venture Partners, a corporate VC, where he was responsible for deal origination, investment due diligence and portfolio reporting. He was previously a consultant with the strategy consultancy Oliver Wyman, where he worked across the retail, aviation, healthcare and FMCG sectors.

Luke originally planned a career in science and he holds a PhD in biochemistry. His focus at Forward Partners is on sourcing and executing new investments.

22
Nov
BLOG | Announcements

How to ace Office Hours like Molly Hart

Molly Hart is the founder of HIGHR and our most recent investment from Office Hours.

Reading time: 5min

15
Nov
BLOG | Announcements

FemTech Office Hours

in partnership with Octopus Ventures

Reading time: 2min

Founders Programme Interview: With Rich Serunjogi

Following opening applications for the 2nd Edition of our Founders Programme last month, we had a chat with a member of…

Reading time: 3min