Today we are announcing the Capital Aid and Tradeshift partnership. CapitalAid has a backup of 500bio€ committed on paper – and when this flies we will have a further 5bio€ committed to lend to small and medium sized companies. It’s just factoring – they did it in the High Middle Ages when Venice became extremely wealthy through its control of trade. There is absolutely no rocket science involved:
CapitalAID will simply offers to pay invoices for a company on the same day as they send it instead of waiting 30-90 days.
(if your company qualifies to get paid – you will see the offer at a computer near you – very soon)
No (or very very few) small business can wait 1, 2 or 3 months for their money – especially when the banks have got into trouble and killed their (even small) overdraft facilities. I have seen friends companies getting shut down because the banks suddenly wanted 100% payback of the credit-line – overnight. And I have never seen a web agency or a startup who could survive getting Shell, Coca Cola or Boeing as a client – they simply cant wait 3 months to get paid – Startups have to pay salaries on Friday…
How To Do A Deal Like This
Like all other deals of this size – its been a crazy ride – this idea was obvious from day one at Tradeshift – and we (founders and investors and board) have been pushing Tradeshift from the very early days (5years ago) to start offering small companies on who are invoicing via Tradeshift to get their money instantly (there is some magic behind the scenes – but not much). But since Tradeshift is one of the fastest growing software platforms in the Enterprise SaaS category – with sales exploding and demands from clients piling up it never got much attention.
Since Tradeshift now has more than 10x the users/companies (under contract) then Ariba ever got (Tradeshift competitor bought by SAP for 3-4bio$) – we have had to take it easy and focus on the product and the crazy demand. We also had another problem – what country do you choose to start the factoring – when there is 192 to pick from?(Tradeshift has users in 192 countries). So due to my impatience – and this incredible opportunity – I starting pushing some of the people around me – and Torben Petersen has been taking the task with serious ups and downs for the last 24 months. With the announcement of the partnership confirmed on the Tradeshift blog, exciting times are ahead and a business which can really help startups is ready to explode… very soon.
This is a political deal for me – it’s very painful to watch the banks collecting government money (your money) – and not be able to deploy them where they are needed = with the small and mid-size companies.