Phil Siarri talks to Sam Kawtharani, co-founder of Seedlify, a Montreal-based startup that specialises in Capital-as-a-Service (CaaS).
Hi Sam. Can you tell us about your background and your company Seedlify?
I grew up in Beirut, Lebanon, where I majored in Computer Science and Business Administration. I left the country in 2006 to join a UK-based company (KnowledgeView) as a remote project/product manager, and finally decided to move to Canada in 2009, and I’m happy that I did.
I’ve been working in the fintech space for the past seven years, specifically in the payment processing and alternative lending industries. As a product manager in the lending space, I noticed how the products out there are still structured in a traditional fashion. Technology has evolved, but the loan product itself hasn’t. Traditional financing doesn’t work for early growth and revenue startups. Exploring various way of finding entrepreneur-friendly risk capital, and after remembering a couple of Shark Tank episodes, I came across revenue-based financing (a.k.a. royalty financing). That’s when I decided to launch Seedlify, and brought my co-founder KC Chan onboard.
Seedlify is Canada’s first Capital-as-a-Service (CaaS) provider of marketplace revenue-based financing for early stage growth businesses. Our revenue-based financing is positioned as a credit facility that provides entrepreneurs with access to flexible capital for long-term growth without the restrictions associated with traditional debt financing or equity dilution. Our no-fixed-repayments approach means a business isn’t put under strain.
I like to consider Seedlify as a long-term partner for our clients. We establish relationships with business owners. That’s why we call it Capital-as-a-Service; making capital available to companies as and when they need it. It’s less risky for lenders and borrowers, and more likely to lead to long-term success.
What made you want to help small business owners and young ventures? Do you have a specific target market?
Working in the lending industry, I noticed how our underwriters rejected a lot of applications that could potentially qualify if there was a product that fit their needs and business model. Many startups in the early revenue stage don’t have a stable cashflow to commit to a traditional financing plan. To grow your revenues and business, you need more cash, and unfortunately there aren’t a lot of options out there. This is where we come in — filling the funding gap between VC/angels and traditional financing (banks, and so on).
Seedlify is focused on the tech industry, such as software, SaaS, tech services, digital media or similar online/digital businesses. Basically, any company with a stable recurring revenue in that space. Ultimately, we plan to expand our product as we see fit, but we want to stay away from the retail industry (mamas and papas shops) as we think it’s properly served right now.
What are the minimum criteria to qualify for financing with Seedlify?
Our risk models are still in the genesis mode, but we’ve already established our minimum criteria to pre-qualify a business. Seedlify’s minimum criteria are businesses in the industries I just mentioned (software, SaaS, IT services, and similar verticals). Because our financing plans start at $25k, we require a minimum of $8–10k per month, preferably from recurring revenue sources. The business doesn’t have to be profitable, but we require a gross margin of at least 25–30%. A business pays its monthly payment as a percentage of revenues, so anything lower than that can hurt their cashflow.
Read the rest of the interview on BankNXT