Crowdfunding has been a growing force in the financial industry, disrupting sectors each time it reaches a new one. Microloan platforms like Kiva and peer-to-peer lending such as Prosper have proven to be a quickly growing alternative in debt, and have increased access and choice for those looking for financing. Companies such as Indiegogo and Kickstarter have given rise to donation and pre-sale based funding for a wide range of people and businesses, and with the implementation of the JOBS act, equity can be sold over similar platforms as well. New technologies that connect people in meaningful ways have a way of changing the world, and P2Bi plans to be a part of that.
One area of financing that has not been disrupted by crowdfunding (yet) is the business receivables market. The idea of a business selling its invoices (accounts receivable) to a 3rd party to raise cash isn’t a new idea, and was even established in the Code of Hammurabi nearly 4,000 years ago. However, this $136 billion industry (in the US alone) has been quiet with relatively little innovation. Transparency has been an issue in the factoring industry in the past, and since it usually involves business-to-business transactions, it isn’t found in a public light very often.
P2Bi (Peer-to-Business Investor) is working to change this. As the first crowdfunded business receivables market, they have opened up a new and transparent path to finance growing companies, and have been connecting investors with small businesses since early 2012. This is an increasingly important gap to fill – according to a Pepperdine report, nearly 2/3 of small businesses in the US were recently unable to secure bank loans, where many had the ability and desire to repay loans but not the credit for a traditional bank to provide funding to them. With P2Bi, business owners are able to find competitively priced loans, and accredited investors can buy into portfolios of asset-backed business receivables, which are likely to generate a higher interest rate than cash instruments that are currently returning closer to 0 than even 1%. P2Bi works with a wide variety of small businesses, with the exception of transportation and construction.
P2Bi recently raised a Series A investment round, including investors from the Rockies Venture Club and John Spiers (who recently exited NexGen), among others. This follows their August 2012 seed round, and will be used to help the business scale. Among other activities, they will be hiring for multiple positions (LINK) and relocating from Louisville, CO to Denver. “We’re really excited about moving to Denver. It makes the most sense with the density of businesses and the finance industry in Denver,” said Krista Morgan, co-founder and CMO. P2Bi will also benefit from local investors and connections in the community. “Peter Adams (of RVC) was really instrumental in getting investors there and convincing them to come on board, Krista said.
Congratulations to P2Bi on closing their Series A, and best wishes helping small businesses grow while creating value in Colorado!
Tim Harvey is a Master’s of Engineering Management student at CU-Boulder and a regular contributor to the Rockies Venture Club. He has started a few businesses (nothing big yet) and most recently worked as a Fortune 500 marketing consultant with a neuroscience-based startup. Prior to that he was an investment advisor for individuals and corporations, holding FINRA Series 7 and 66 licenses.