The Problem: High Growth Company Faces Cash Shortfall

 

Local entrepreneurs started a company that creates and develops mobile video games, deriving revenues from in-game purchases. The company initially was funded by angel investors.

  • Early State Dilemma
    The company suffered heavy losses in its pre-revenue stage as a result of R&D expenses. Losses continued after the company started generating revenues because of heavy advertising expenses.
  • Cash Flow Issues
    As accounts receivable increased, the company encountered mounting cash flow problems. The founders were faced with a choice: raise additional equity or find an alternative funding source.

The Solution: First Business Bank Factoring Program

 

The company decided to utilize First Business Bank's factoring program, preventing further dilution of initial investors.

  • Growth Accomodation
    The factoring facility grew in accordance with the company’s increasing accounts receivable levels.
  • Success
    The factoring facility allowed the client to achieve critical scale with its initial game, resulting in the eventual sale of that game for $35 million!
  • Continued Relationship
    The company continues to value this partnership. They still utilize their factoring program as they develop new games and position themselves for the next big payday.