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.
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.