Just as Amazon is the go-to marketplace for buying stuff online, Kickfurther strives to become the world’s first-ever marketplace for inventory funding. Through its ingenious business model, the platform allows emerging brands to get access to funding relatively early in their journey in the competitive CPG space. This move has the positive effect of bridging the funding gap between founders and angels that would otherwise just widen further with time. Join in as Elliot Begoun talks to the platform’s founder and CEO, Sean De Clercq and learn why Kickfurther is something that all new founders definitely need to check out. Sean also shares a bit about his personal entrepreneurship journey plus some additional insights on the topic of funding in general.

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Kickfurther Makes Funding More Accessible To Emerging CPG Brands With Sean De Clercq

I’m thrilled to have Sean. We were laughing before we started because there are some guests on some episodes where you know shit just happens, and it seems like it’s a lot of work to actually get the two of us together so that we can have this conversation. This was one of those. We had a last-minute change because Sean got stuck on an airplane, and then technology, but we’re here. What Sean has to share about Kickfurther is important. It’s a great tool for all of the emerging brands to understand and explore to see if it’s the right fit.

We want to have a conversation around that and around funding, in general, and answer your questions. Let me first start by asking Sean to introduce himself and then we’ll jump in. Sean, thanks for joining, and please share with everyone a little bit of your background. I learned that you’re moving. They’re closing on a house in Buffalo, which is where my wife is from. It’s a cool city that has a bad rap. I would encourage anyone to travel there. All yours, Sean.

Thanks, Elliot. I’m Sean De Clercq. I’m the Founder and CEO of Kickfurther. We started Kickfurther way back in the day. I was running a merchandising company selling slightly customized, unique products to retailers here in the US as exclusives or white labels. As that business scaled up, we encountered this issue of inventory finance. How are we going to pay for this stuff before we can earn the revenue for delivering it?

There wasn’t this good solution in the market, so we said, “Why don’t we take this new thing going on over here, which is crowdfunding, bring those people over and introduce them to the entrepreneurs like myself that are running growing product businesses, and maybe that will work out well?” I would say it’s worked out well for us in the last few years. We kicked that off in 2014. We have a small office in Boulder, Colorado, and a larger office in Buffalo, New York, which is a city that is undergoing a renaissance is the way that I would brand it. We had our first IPO with ACV Auctions, a Buffalo-based company. Squire is doing well. Buffalo is going to be on the map as a new Tech City. I’m hoping to be part of that.

I’m rooting for you and rooting for Buffalo because it’s a cool thing. Before we jump into the questions, let’s start with my high-level ones. Explain to everyone reading about Kickfurther what it is. How do you engage? What does it look like? What are the parameters? Give everyone your elevator pitch, so to speak, please?

Kickfurther is fundamentally a marketplace. We’ve got two sides of the market, you’ve got inventory buyers, people that are purchasing inventory, and then you’ve got product entrepreneurs or brands that essentially want to sell inventory. The way it works is that we work with brands to create what we call a consignment opportunity, where individuals, anyone, the buyers can buy the physical goods at the cost price from whoever the manufacturer is that the business is working with. We have the inventory produced and shipped to the business.

As the business sells through that inventory, it triggers the underlying consignment contract, which we then invoice the business and they pay us. For the businesses that we work with, it effectively pays as you sell inventory funding. For the buyers on the other side of the marketplace, it’s a way to support entrepreneurs while earning a little bit of consignment profit as the inventory sells through for helping to support these businesses.

What’s the average size of that inventory or that brand when they come to Kickfurther?

One of the things that we pride ourselves on is that we can work with businesses early. The minimum benchmark for a business is $150,000 of trailing twelve months’ revenue. The smallest deal we’ll do is about $12,000 of inventory funding. It’s not nothing, but it’s also a lower bar to clear than a lot of other places. The largest we’ve done is $1.15 million on consignment with 1908 Brands Boulder Clean. It was disinfectant wipes in the middle of COVID, so a good deal there. Our average is right around $100,000 to $110,000 per consignment opportunity, or we call them co-ops.

Where do these funders come from? Are they individuals? Are they groups? Are they family offices? Out of curiosity, what’s the average funder profile?

Up until November of 2020, every single inventory buyer or inventory funder on Kickfurther was an individual person. One person typically funding using ACH or credit card buying a few $1,000 of inventory per deal. In November 2020, we’ve recently signed a deal with a family office that is taking 25% of deals that fit their funding profile.

That would be my next question. Is it usually one funder, one deal, is it multiple funders per inventory, or it could be both?

Almost always multiple funders. If you’re funding $100,000, you’re looking at probably 50 to 100 people that are going to be part of funding that deal. We’ve had maybe two instances in our history where we had one person fund the entire consignment.

What’s the brand’s role, if any, in soliciting these funders? When you look at other crowdsourcing platforms, whether it’s equity crowdfunding or rewards crowdfunding, the brand is actively engaged and soliciting their funders, their investors. How does that differ with you?

On Kickfurther, we always encourage our brands to let their current community and fans know that they’re funding on Kickfurther, but it’s definitely not a requirement. Most of our businesses do relatively little promotion and 99.5% of everyone we launched on Kickfurther is successfully funded.

I’m taking moderator’s prerogative here and asking my questions first so that I don’t get screwed out of the deal here. What are some of the things that brands need to be aware of to be in a position to get funded in terms of clarity around financials and cogs and preparation? If I’m thinking about this, what’s the checklist I need to be able to run through to determine if I’ve got my shit together enough to make this a viable option?

For the Kickfurther checklist, I would say that the minimum benchmark $150,000 of trailing twelve months revenue. Every entrepreneur I know is working with a bank. We pull all that data through plaid, a plaid-enabled account, or we can also look at bank statements with Ocrolus. We would be looking for $150,000 of trailing twelve months revenue, it has to be a physical product. Something that we can actually put on consignment and track a physical good.

There are benefits for brands if you have your logistics like your shipping and storage of inventory, if that’s managed by a third party, as opposed to it getting shipped out of your basement or your attic. That’s preferable for Kickfurther, it gives us better visibility into the inventory. Clear and responsive communications with your product supplier, your manufacturer. If they respond, we check in with them to verify the cost of goods and a couple of other elements. As long as they’re responsive, we can get brands qualified and ready to launch in about 48 hours on our platform.

How long does the average brand work with Kickfurther? Do they come back multiple times for multiple production runs? It’s not a one-and-done, right?

Yeah, absolutely. On average, our businesses are doing four co-ops per company we work with, and the co-op average length is about 5.1 months. If you work that back, that’s about a twenty-month participation on average. We have a pretty decent variance there. We’ll have businesses that come once right before they hit a private equity round, and they just need that bridge funding of inventory between one funding round and the next, so we’ll see that. We have businesses like Donnelly that’s done 44 deals on our platform over the years, so there’s a decent variance there.

I know that Kickfurther, and correct me if I’m wrong, you’ve been starting to focus more and more on CPG, food and bev, personal care, and so forth. What about perishable inventory, either frozen, refrigerated, or relative shortcode life, are you finding that to be as attractive or less attractive to funders? What’s your perspective there?

That’s a good point, I should have mentioned that. We don’t allow regulated products. No alcohol, tobacco, and firearms. As of this time, we don’t allow for refrigerated products on the platform. The reason for that is just the cost of storage and shipping if you have those types of products. Essentially, the cost of distribution is significantly higher. Whether it’s because you have to pay for refrigerated trucks, you have ongoing storage costs, or you need to distribute having a license or something like that. It’s because of that and because of the barriers to distribution for those different types of products, we view them as riskier product categories. We don’t allow those kinds of co-ops on our platform.

No refrigerated and no frozen, but dry and as long as it’s not regulated.

Yeah. Shelf-stable, we’re good with. We’ve done energy bars and ready-to-drink stuff. That’s fine. Perishable is okay if you have a purchase order. If you’re going to sell a container load of lettuce to Whole Foods, and you’ve got a purchase order for that, we can help there. If you are trying to fund a container load of lettuce and you don’t know who you’re going to sell it to, that’s something we stay away from.

Let’s talk about the process. Tanya Butts wants to know about CBD. I would assume that’d be one that you’re not doing right now?

We’ve done CBD. CBD is now allowed. We’ve done a few different CBD products on our platform, even Charlotte’s Web, we worked with them back in the day. We pioneered that relatively early and we have a few of those.

A question around how long it takes and what a brand needs to engage with Kickfurther. Let’s say I wake up this morning and go, “I got to run inventory. I got this big PO from UNFI or KeHe. I’m looking at cashflow statement,” which I hope everyone reading is still doing a weekly cashflow forecast to actual. I’m looking at the forecast here, but preaching there for a second. I have this recognition that I don’t have the cash reserve or the comfort in my cash reserves to run all that inventory to fill that PO. How quickly and what’s the process look like for me to engage with Kickfurther?

You come to Kickfurther.com/start or click on the link there that says For Businesses. You go through an onboarding form, it answers a few basic questions, and then one of our team members will call you up. Soon thereafter, it depends on how responsive the suppliers are. If your suppliers, the people that are manufacturing your goods, are on the ball and they respond to our emails, we can get you qualified in about 48 hours. It then takes about one full day to get funded. If you came to us on Wednesday, we could probably get you funded by next Monday or Tuesday.

Once you’re on the platform and established a relationship, that would speed up that process? If I’m a brand trying to build this into my cash management strategy, trying to forecast out, and look at my cash cliff, and do all of those things, what are best practices? How do I engage? What do I do? What’s the best one?

If you’re forecasting that you’ll need cash, you should come to Kickfurther to get an idea of how much you’ll be pre-approved for, verify all of that information. I would do that two weeks out from when you actually need the cash. You want to get ahead of that a little bit. You don’t want to get stuck like, “I thought it was going to be there.” Now, it’s not, and you don’t have any other options. I would encourage entrepreneurs to get a little bit ahead of that, at least a couple of weeks out. Make sure that everything you expect is the way it will be.

That also leaves a bit of a cushion in case. Let’s say you want to launch the deal at 1.1% profit per month, but our marketplace decides that they want to fund you at 1.3% a month. Sometimes, we’ll take a deal down, and we’ll relaunch it with a little bit more profit if it looks like it’s not going to get successfully funded on the first round. That’s one of those things we’re having a little bit of cushion to make sure that you’ve got the support that you need to continue growing your business. It’s good to get ahead of that.

Two weeks out, talk to us. Find out what you’re pre-approved for, put us in the mix of the various funding options. We’ve got a pretty understandable cost of how to use Kickfurther. We build on top of your cost of goods. That’s the way that you can forecast your cash in the future. “When I get paid on this sale, my cost of goods is going to be 10% north of what it was had I not had my inventory funded,” but there’s no cash out of pocket on the front end.

That’s the key, to actually start to get on the platform, there’s no cost to the brand to get pre-approved and to get an understanding of what they can potentially look towards for funding. There’s no cost other than the time to prepare the information that you need, which is stuff that brands should have anyways. There’s a benefit to having that.

Kickfurther doesn’t make any revenue until the brand gets successfully funded, where we’re right there along with the brands. We want to find great businesses and give them compelling offers that make them happy to take funding on our platform.

How do you make your revenue? Is it the percentage of the money that’s funded? How does that work?

Exactly. Unlike a lot of other platforms, we take a flat 5% funding success fee. That includes all transaction costs and everything for the business. If you raise $100,000 on Kickfurther, Kickfurther earns a 5% success fee, so $5,000 of revenue there.

How is that paid? Is that paid through the funders or is that something that as a brand, I write you a check?

Digging into the details there. If your cost of goods is $0.95, the way we do it is we include the cost of the funding as part of the co-op.

You gross up the cogs, the 5%.

We would fund it at $1. We then would take our 5% out of the $1.

At the end of the day, there’s no cash exchange brand to Kickfurther. It’s all done the other way around, which makes total sense to me. In my opinion, from a cost of capital for an early-stage brand, it’s going to be pretty hard to beat that. You know what it is, it’s there, and it’s reasonable. You started at the beginning explaining a little bit about how this started, but I’m also a little bit interested in your entrepreneurial journey just to switch gears a bit. I always find it a huge benefit when entrepreneurs work with other entrepreneurs in a supporting role. You get the entrepreneurial journey, you get the night terrors, the crazy work hours, and all of those kinds of things. Share with me a little bit about when you decided to do this, what you’ve learned along the way, and why you’ve chosen to help other entrepreneurs with this platform?

I’ve got a lot of crazy stories from back in the day. My entrepreneurial journey started when I was a teenager and my parents got us this board game called CASHFLOW for Christmas. This board game called Cashflow, you started as some person that got a certain amount of income, and the whole goal was to reach financial independence. I remember in that game, it was like a hack, if you could get a business, and then the business would produce income for you that could match your expenses, and then you could win the game. I remember this Cashflow game had a rat on the cover. That was one of the things.

My parents are entrepreneurs, and it always has been in my blood of this idea of I want to own the value of my labor. I’d love to get to a point of financial independence. That was where it all started. There were a few ventures in college with my roommate that blew up on the runway before we even got it off the ground, or even I would say, blew up in the hangar, it didn’t even make it on the runway, as is the case.

It was just like tossing around different ideas over time. I remember once I came back from this long trip and I had this amazing sleep, as you’d want to do after a long period of travel. I woke up the next morning and the first thing I texted my family was, “I got the idea that’s going to make me rich and famous.” I swear that was the text I sent to my family chat on WhatsApp. That was the inception of the idea of Kickfurther, which originally, we’re calling back in the day Ouiby, which was terrible branding.

There’s one lesson learned, don’t brand your company Ouiby with French spelling if you’re an American business. I had that idea, so much of it has changed since that first idea that I had, but that was it. I felt like I found something that was solving a big pain point. The first thing I did was I applied to Miller Lite Tap the Future with my idea. We made it to the semifinals and we lost. One of the judges said, “What are you doing at Miller Lite?” This is a promo thing for their beer company. “You should be going to a business accelerator.”

I’d never heard of business accelerators prior to that point. I did my research, I applied to accelerators. The whole idea of venture backing, equity funding for businesses was pretty foreign to me at the time. I was 27 years old. I say that I spend a lot of my day learning new stuff and solving new problems that I never thought that I would encounter when we started this years ago. It’s like this constant learning experience.

I will tell you that I’m quite a bit older than you are. I’ve been doing this for over 30 years. That’s probably one of my favorite things. Here I am having done this over 30 years in my 50s, I get up every day, and I know I’m going to learn something new and get to be a student. That’s a big motivator for me. I think that’s a blessing of being an entrepreneur. It’s also the curse because, in one way, you never get to the point where you know because there’s always something that you don’t know. You’ll never get bored. It’s not anything you’ll find yourself idling around.

We’ll come back to the tactical stuff about Kickfurther because I want our brands to understand how to leverage this tool, and I want to talk a little bit about equity versus debt and get your opinion and all of that. I want to stick on this entrepreneurial side for a second because I always think it’s great to have other entrepreneurs hear from other entrepreneurs who are following a different path and different sectors who look at things differently, and share a couple of things. One is, if you could tell yourself when you were 27 and first starting this something that you know now, what would that be?

When I was 27, I was way too arrogant. As with many entrepreneurs, when they’re starting something, you got to be a little bit crazy. I don’t know that 27-year-old me would listen to me now, but what I would tell him is, “Swallow your ego. The reason you work and engage smart people is because they’re smart, and you should listen to them. You should turn off the voice in your own head more often than not, and pay attention to all the smart people you have around you.”

That’s not easy. I’ve written articles about this. It’s a bit like the analogy or the visual that is helpful for me, it’s like a teeter-totter. At times, as a founder, you have to sit on the side that tips the fulcrum towards being malleable, open-minded, and willing to adjust and change. There are other times where you have to tip it in the other direction and dig your heels in and say, “There’s a reason nobody else has done this, it’s because they’re following common logic. I need to be steadfast.” That’s a tough balancing act.

All of you reading, you’ll find your ego will return and manifest in different ways along the journey. When you’re new into it and you’re young into it, you’re often brass and a little bit headstrong and cocky, then you get broken and softened and it lessens. As you start having success and people start looking towards you for answers, that begins to reinforce your ego. Suddenly, it rears its head again, and you start having that same kind of self-assuredness and cockiness. Eventually, something else will cause it to crack. Ego is not a bad thing, but having ego awareness is necessary.

We’ve done all that. I want to get back to transaction. A lot of early brands have historically felt like the only way to bring money in has been through selling equity in their business. The reality is, equity, in the long run, is always going to be more expensive than that. You, with Kickfurther solution, fall somewhere completely different in that process. Tell me how you see this plane in an overall capital strategy for a business?

The best but least satisfying result is it depends on the business. It’s going to be different for each business. What I would say is that if you have aspirations to sell your company, if you’ve got a product company and one of the things you’re thinking of is like, “This would be awesome if Coke bought me for $50 million, and I could like live financially independent.” That’s then where the equity becomes expensive. They’re going to take a big chunk out of that future exit scenario for you, but sometimes, it’s necessary.

If you’ve got a ready-to-drink company, the capital costs of setting that up, and all the marketing that goes into setting something like that up, you’re going to need an equity partner to help you pay for that. There are some other businesses where if you’ve got a strong product-market fit and you’ve got strong margins, maybe you can fold the cost of the marketing into your growth strategy. I would say, the number one thing is, if you can charge decent margins, 75% plus going direct to consumer, then you’ve got a different capital structure than if you’ve got thin margins.

It almost starts from there, which is like how much can you charge for what you’re selling? Depending on that, a bunch of the other questions flow through. What I would say is that long-term, as a viable business, what you don’t want is for your margins to be so thin that you can’t afford the cost of financing your inventory. Whether it’s through Kickfurther, through debt, or whatever else, if you’re looking at your model and it’s like, “If I have to pay to finance my inventory, then my whole business goes underwater,” that’s probably an indication you should be raising prices.

All of this is interlinked when you look at the business model that these entrepreneurs are working with. That’s what I would say, make sure your margins are strong enough that you can support inventory finance. You will need it at some point in your growth story, whether it’s early or later, it’s going to happen where you’re not going to want to pay equity. You’re not going to want to sell pieces of your company just to fund your inventory.

If you get fortunate enough that you grow the business to the point where you have investors, they’re not going to want you to sell portions of your company to fund your inventory production because everybody gets diluted down over time. Make sure from the beginning that your margins can support it. Even if you can figure that out of like, “Once I get to this level of quantity, I can negotiate this price with my manufacturer, then I can fold in the cost of financing to continue to accelerate growth.” It’s a modeling exercise, and there’s a lot of interlinked factors.

That was a great answer and an appropriate one. As a rule, ideally, what you want to do is you want to use equity to fund growth. You want to use debt or debt-like instruments to fund working capital, but you don’t always get that choice. It’s not always that clear-cut. You’re absolutely right about margin. In this industry, in the natural products industry, that’s one of the toughest challenges, to come in here and start your journey with the right unit economics.

The way you described it is a way we don’t talk about it a lot. We talk a lot about what happens when your unit economics don’t work in your favor in terms of the impact that has on cashflow and your burn, in general. The fact that you wind up with the negative contribution margin. Instead of it being revenue growth, it’s investing. You’re investing in building growth. Two things that are important to understand are, that’s another reason why having an eye on margin is important as you look at the horizon of your business. It is going to make financing of that inventory affordable or viable. If it’s not, then you’re closing the door on an important way you can grow your business that’s non-dilutive. That’s great coaching. The other is that you need to understand what that cost is going to be on your horizon for funding networking capital. Make sure that you build that in and can support it.

Honestly, knowing that, what you can afford to pay, gives you leverage when you’re negotiating, whether it’s with anybody, like, “This is what I can support.” You’ll then get an idea of how you can achieve that if you have a clear number in your mind, as the entrepreneur, that gives you firepower as you have these conversations.

Do you see a sweet spot in margin with those that are coming to raise with you or do you not get to that level of involvement?

We have this general rule of thumb at Kickfurther that we call the double-double. I don’t think we invented it, but the idea is that, if you’re selling a product, you want to have at least a 75% direct-to-consumer margin. The reason for that is when you’re selling wholesale, after all the chargebacks, deductions, if you sell wholesale at a 50% margin, you’re going to end up earning probably 30 to 40% on that. The wholesale guys, the retailers’ target or whoever, want a 50% margin as well.

You buy for one, you sell it to them for two, they sell it to the end consumer at four. That’s a 75% direct-to-consumer margin or MSRP. The most successful brands that we see today start with a 75% direct-to-consumer margin first. They establish their brand, and then they go to these buyers and they’re like, “I’m already selling millions of dollars. I know that people love my product because I’m already selling a ton of it. Do you want to put it on your shelves?” It then becomes a much easier conversation and you already know what your price point and everything else is going to be.

That was a great way to explain that in a way that I’ve not heard clearly. It begs another question and I’m sure it’s going to come in anyways. When we first talked about this, you mentioned having a PO in hand. You were referencing a container of lettuce, but for those brands that are selling almost exclusively D2C and not even through a third-party platform like Amazon or an eTailer, but off their own website and so forth. Does that impact the decision of funding when there isn’t clarity around a wholesaler PO and when it’s going to be almost like, “Here’s what we’re doing online, we think we can grow this?” How does that impact the ability to get funded?

Depending on where you’re hosted, I know Shopify Capital has its capital arm. Shopify provides capital to probably the top 5% or 10% of their sellers. I would imagine something like that. When you’re getting started, where you are can impact what you have access to. That’s the reality, but even then, typically, they want to see a decent amount of volume before they open the doors on that for you. It can impact it, I would say.

Another question here is going back to what you said around refrigerated or temp control, is that something you think will change over time?

I think so. Our goal for Kickfurther is we want to be the marketplace for inventory funding the way that Amazon is the marketplace for buying stuff. There’s a huge demand on both sides of the marketplace to participate in this. We’ve got a real opportunity. When I look at what is that future state of Kickfurther looks like to me, why should there be any inventory that is available to be financed through some means that we can’t make available on Kickfurther? We have to get better at understanding what are the controls in place and how do we qualify those types of inventory products? That’s work that needs to be done.

Two cool questions here. One is, and this is from a founder, if I want to support other founders and want to be a funder on Kickfurther as well, how do I do that?

It’s super easy, go Kickfurther.com, login, you can sign up with a Facebook account, it would take you literally five minutes. On our onboarding, we make it clean, easy, and you can get started and ACH funds in or buy inventory on a credit card. Both of those are available to the users on our platform.

How do I make money as a funder?

All of the product businesses offer a consignment profit as part of their deal. I mentioned, 1.1% a month. That’s what you’re typically seeing on the platform, it’s between 1% to 1.5% of consignment profit offered per month of expected selling time. If you think, “I’m going to fund inventory in May. I’m going to get through my holiday selling season, and I’ll pay it off in November.” Six months at 1.5% might be 9% consignment profit offered to the people that are funding the inventory. If you buy $100 worth of inventory, you might expect to get $109 back once the inventory has been sold.

What’s my recourse as a funder if it doesn’t get sold?

The underlying contract is a true consignment contract. Your recourse as a funder if the inventory doesn’t get sold, is that the business returns the inventory to Kickfurther, and then you get the option to take delivery of it by paying the shipping cost. You’ve already paid the cost of goods, so you pay shipping and we’ll ship you the stuff that you funded, or you can put it through our liquidation channel. The reality is if you look at reverse logistics, liquidation, or whatever you want to call it right, that’s going to be taking a haircut on the original cost of goods. We’re lucky if we can get 10% on the cost of goods, and much more often, it’s 5%.

Risk is still being borne.

Absolutely. The reality is if you are funding inventory that you would be happy to take delivery of, like, “This is a cool sweatshirt. I’ll fund this because I can use it or I can give it away as a gift.” You put in $50 and you buy one pack of inventory, then great. You’re in a pretty good position because the worst-case scenario is you can take delivery of your sweater. What we see is that our users have bigger appetites and they’ll buy $5,000 worth of sweaters. It’s like, “Nobody wants a pallet of sweaters delivered to their front door.” It’s based on the appetite of the individual.

That’s another great question, what is the minimum if I’m a funder?

Each co-op on Kickfurther is organized into discrete packs, it’s what we call them. Literally packages of inventory. It depends on the attributes of the business. For funding refrigerators, the minimum pack might be $200, $300, $400. If we’re funding socks, our Kickfurther minimum pack size is a $20 pack.

The other question, you said 99% of things get funded, when things don’t get funded, what’s usually missing?

The businesses that struggle to get funded on Kickfurther are businesses that sell professional-grade equipment that our community doesn’t understand the market. I remember we were selling this amplifier that was a professional-grade audio amplifier that we were trying to help get funded. It was an amplifier that would sell for $1,500 or something like that. Whereas you go on Amazon.com, you can buy an amplifier for $200. If our community doesn’t understand the market or doesn’t understand the product, those products can struggle a little bit more. Even then, I would say we’ve had some success funding some niche products as long as the underlying business is strong. We have a high degree of confidence. Our community has a high degree of confidence in the Kickfurther platform.

Another question coming in, this is somewhat interesting to me. Who are your competitors in this space? Who else is there doing what you’re doing?

As far as I know, there is nobody operating an inventory crowdfunding marketplace. Specifically for what we do, which is this underlying consignment contract where you can return the inventory if it doesn’t sell, etc., and the attributes of our platform. As far as I know, we’re the only game in town. That being said, there’s a lot of organizations that are providing working capital solutions for small and medium businesses.

The earliest, if you’ve got little revenue or practically none, would be Kiva Zip. Kiva Zip does interest-free loans up to $10,000. As you move up, wherever your point of sale is, most of those guys have a capital solution. I mentioned Shopify, Amazon, Amex, and Working Capital. PayPal has a solution. Square has a solution. All of these payment processors, many of them have solutions that can provide working capital.

As you have more revenue growth, you can start to move into funding with organizations ClearBank. If you have wholesale purchase orders, there are online factoring groups that are happy to factor in your receivables at a discount. Kickfurther’s special sauce is that we funded the inventory agnostic of distribution channel. If you’re selling to Target, you’re selling through Amazon or Shopify, we don’t care. We just track how much inventory exists, and we essentially invoice against how much inventory has been sold. Whereas a lot of the other solutions will be specific to wholesale, Amazon sales, or whatever else. That’s our goal, to become the holistic inventory funding solution across the market and across all of these different channels.

I was unfamiliar with anybody doing what you’re doing. That’s why I was eager to have you on here because it’s a unique solution. Karen Nation has a question. She says, “If I’m understanding correctly, the brand shares their co-packer information in the application process. Is that shared with others? How is that information protected?”

It is not shared with others. For any businesses that are curious about what gets publicly shared, I would encourage you to go to Kickfurther.com/coops and take a look. What we publicly share for other brands is going to be similar to what we publicly share if you go through the process with Kickfurther. We understand that is sensitive information for product businesses. That’s my background as well. That doesn’t get publicly displayed but we do get that information in the process. We protect it, we’re hosted on Amazon. I’m not technical, so I can’t tell you the SSL and the various encryption methods they use. It’s safely hosted in an Amazon distributed database. That’s where our security comes from.

What’s the future for Kickfurther? What do you see on your product roadmap in terms of offerings as you look down the road?

One of the things that I’m excited about that will be getting deployed in an early alpha stage, but that’s the way things go. They then get prettied up and improved over time. We have this product specification app that we’re putting out that essentially helps product entrepreneurs manage their supply chains by creating quite simple product specification sheets. Also, quality control and quality insurance specification sheets.

What we see a lot with entrepreneurs, even guys doing pretty significant revenue, millions of dollars of revenue, is that they went on Alibaba.com, they talked to some factory. They wanted to sell wipes or something. They talked to some wipe factory, and they’re like, “We want to buy this inventory.” What they get from the factory is the factory sample, and then they order from that factory. Over time, if they want to find another factory, a lot of these entrepreneurs aren’t doing the work to spec out the products at the beginning, which means it becomes challenging to switch your manufacturer.

By the time you’ve paid them and by the time they’ve shipped their inventory, they don’t want to reveal any of that proprietary information to you. What’s their formula? What grade of plastic are they using, all these specs that go into manufacturing your product? The secret is that you get all that information contingent upon placing an order with that manufacturer. You put it all into a spec sheet. When you have that spec sheet, you can shop around the exact same product specs to multiple manufacturers, and use that to command the best possible cost price for your business.

This is critically important if you’re just getting started. If you’re buying 500 units, okay, who cares, but if you have aspirations of buying 10,000 units, you need this information to be able to negotiate with your manufacturers. We’re deploying this app. We’re going to push it out there and provide support. It’s targeted at relatively early-stage entrepreneurs to help them build this resiliency and redundancy into their supply chain management, which is what my background is in. That’s a product that’s coming out. I’m excited about it because it’s both an opportunity to create value in the marketplace, and hopefully, it also helps Kickfurther with a selection of finding these entrepreneurs that are doing the right things. Also, finding them early to provide our support as quickly as possible.

That’s cool and needed. It dovetails well into this question from one of the brands. We would do quite a bit of work ourselves with brands that are either domiciled out of the US or at least offshored their manufacturing. How does that work with you if I’m having a product produced in China or Malaysia, or shipping products from New Zealand or Australia on the water and trying to have that funded? Is that something that is doable? Are there any nuances around it?

Yeah, if we didn’t work with overseas manufacturers, that would significantly limit the size of our addressable market. We’ve been doing that from the beginning. We need that the inventory, the business, and the business owner are US-based but we have to work with overseas manufacturers, otherwise, it just doesn’t work. Fortunately, we have been doing this long enough that we’ve established these processes. It doesn’t create a hiccup as long as the manufacturer is communicative and respond to our emails. The world’s getting smaller and smaller as there’s more and more technology, so it doesn’t present a huge issue for us.

What about title? Where does title transfer take place in that consigned environment? With something like that, does that happen at landing here through customs? That may be too technical a question for this, but I’m just curious. If it’s out on the water, you have to be able to, in this situation, define the clarity of when ownership transfers.

Effectively, the title is managed by the business but the inventory that they’re managing is Kickfurther’s. We buy the inventory, it’s technically Kickfurther’s. We manage it on behalf of our community. We have a power of attorney agent agreement with our community members. They empower us to manage the inventory on their behalf, we empower the brand to manage the inventory on Kickfurther’s behalf. We also file a UCC-1 lien.

That actually is another interesting attribute of our platform. What it means is that the business is selling on consignment and assets that they don’t own. If a business is managing its accounting correctly, the consigned inventory from Kickfurther doesn’t actually show up on their balance sheet because it’s not their asset. They’re essentially a licensed salesperson for us to sell our inventory. That means we can play well with other funders, with other banks, or factors that businesses are working with.

If people want to learn more, people want to understand how they can get started, what they should know about Kickfurther, what’s the recommendation? How do they do that?

Follow us on Twitter and on Facebook. We have a responsive team. If you come to Kickfurther.com and hit that contact button, feel free to reach out to us. If anybody has any questions directly for me, you can reach out to me at Sean@Kickfurther.com, and I’m on LinkedIn too.

Speaking of name, Tanya Butts has a question. What’s the etymology of your last name?

De Clercq is a pretty common Dutch last name. My dad’s from Belgium. My mom is from Beijing.

You got your answer, Tanya. Sean, thanks so much for joining me. I appreciate it. I don’t do plugs because I don’t do anything promotionally, but I’m just going to say this straight out. Kickfurther needs to be something that every single brand, at least, puts in their bag of tricks and consideration as they look towards how to fund their business. It doesn’t necessarily mean it’ll work for you. I love when we see solutions to problems that are completely unique and different. The reality in this space, especially in the natural products industry, is that there is a funding gap.

What’s happened is the traditional venture capital funds have gotten bigger, and therefore, their check sizes have gotten bigger. Therefore, the companies have to be further along before they are ready for that. That means you’ve got the angels and you’ve got this gap. Companies, entrepreneurs are needing to figure out how to go further on their own or further in a scrappy way than they ever have before. They need alternatives. They need solutions.

Kickfurther is a unique one that is worth every brand, at least, exploring to see how it fits. I appreciate you taking the time to explain it. I know that we are going to be doing a roundtable with you for our brand, specifically, kind of a fireside Q&A, which is great. I hope this episode helps all the other brands reading, understand what is out there in terms of a potential solution and that they investigate. Thanks so much for joining. I appreciate it. I’m glad we pulled it off.

Thanks so much, Elliot. It was great being here.

Take care.

Important Links

• Kickfurther

• ACV Auctions

• Squire

• 1908 Brands

• Ocrolus

• CASHFLOW

• Amazon.com

• Kiva Zip

• Kickfurther.com/coops

• Alibaba.com

• Sean@Kickfurther.com

About Sean De Clercq

Lifelong entrepreneur working on solving one of the hardest problems product businesses face, how to fund the production of their inventory. Had to deal with it myself and when there wasn’t a good solution, I decided to make one.

Grateful to all those that have helped me in the past and continue to help me today. I try to give back where I can and 100% subscribe to the Boulder philosophy of give first.

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