Advertising in Google Ads and Facebook Ads requires making card payments while the campaign is running. After reaching a certain track record and spend level, some advertisers can obtain trade credit in the form of a 30-day payment term.
For many advertisers, this constraint prevents investing bigger budgets, especially if the sales process takes longer or when the investment in advertising does not pay back on the first transaction but is based on Lifetime Value – e.g. for subscription products or where customers come back and make repeat purchases.
We talk about a new way of financing advertising spend available to Polish e-commerce companies with Jakub Pietraszek, CEO and co-founder of Booste.
What exactly does e-commerce financing from Booste consist of?
We offer financing based on the revenue-based financing model, which can be spent on online marketing activities or purchasing stock.
What makes our offer unique is that it fully adapts to the store’s sales results. Repayment comes precisely from the revenue the store generates.
This full flexibility in repayments allows e-commerce owners to invest in growth, because they are really not risking anything.
We do not require collateral or personal guarantees, we do not take equity in the company, and repayments depend entirely on revenue.
This is how we want to support the growth of small and medium e-commerce businesses.
Does that mean you will pay for an online store’s ads?
Yes. It’s very simple: the funds received from Booste can be spent on advertising campaigns using a virtual card that the client receives from us. This way clients can allocate a bigger budget to other activities. We pay for the ads; the rest is in the client’s hands.
Do you finance only ads?
No, the capital received can also be used to pay invoices issued by marketing agencies or to purchase stock.
What is the repayment deadline?
There is no fixed, “hard” repayment deadline; everything depends on the store’s sales results. Our financing is based on revenue and that is the main deciding factor. At the beginning of the cooperation with Booste, we jointly determine the repayment frequency and what share of future revenue will go towards repayment. This creates a kind of time frame.
The cooperation lasts until the client repays the entire amount received together with our fee. If the store starts performing better, it will take less time, but if sales drop or stall, the cooperation period will lengthen. Importantly, this does not affect the amount to be repaid, nor does it create any other obligations.
So, how much does it cost?
From the very beginning of the cooperation with Booste, our client knows exactly what the full repayment amount will be. And it includes only a fixed fee of at most 6% (for marketing activities) or 9% (for stock purchases), charged once, on the entire amount received.
For example, if a client receives €10,000 from us for marketing activities, the amount to repay will be €10,600. And nothing more.
Is there a catch? Any additional fees?
No. Submitting an application is free, as is receiving an offer. After signing the agreement, a single fixed fee applies. There is no interest, mandatory insurance or hidden costs.
The entire repayment amount is known before signing the agreement and equals the borrowed amount plus at most 6% or 9%, depending on the type of expenses financed.
Financing and that’s all?
Our innovative financing model for e-commerce is not just the funds themselves. We care about accelerating companies’ growth, and that takes more than “just” money. We also want to provide substantive support to increase the effectiveness of the marketing activities of the companies we work with. That is why capital from Booste can be used to pay for the services of marketing agencies.
This is in fact the main reason we created a partner programme. This way we connect clients with proven marketing agencies. It is a perfect solution for those who cannot or do not want to create and manage their online advertising campaigns themselves. Marketing agencies do it for them.
As a result, the time that would have to be spent on increasing the company’s online visibility can be used by the owners for all other activities. And as we know, a lot is happening in today’s e-commerce market and you constantly have to adapt to new developments.
Of course, using the services of Booste’s partner agencies is not mandatory, and the choice is always up to the client. We encourage them to start working with the agency whose offer seems most suitable for them.
What requirements must be met?
First of all, the company must be registered and run an e-commerce business, and present a revenue history of at least 6 months. The store should be built on one of the platforms integrated with Booste. The company should also run online advertising campaigns itself or work with a marketing agency.
Currently we finance companies registered only in Poland, but in the near future we plan to expand to other European countries.
How to apply? How long does the decision take?
The whole process is simple, transparent and, importantly – fast. Filling in the form on our website takes about 3 minutes. You can also arrange a call with a Booste advisor or immediately create an account in our app and connect your platforms.
Then we prepare a personalised offer tailored to the needs of the client’s business. If the client accepts its terms – we sign the agreement. Access to funds is possible within as little as 24 hours from completing the online application.
Where did the idea for Booste come from?
Revenue-based financing (RBF) is gaining popularity and is already becoming the preferred way for e-commerce companies to raise capital. The RBF market was worth over 901 million US dollars in 2019, and by 2027 this value is expected to grow to over 42 billion. This is enormous potential that we want to tap into.
The idea of founding Booste was born even before the pandemic, which after all accelerated the growth of the e-commerce market, and dynamic changes could be observed even earlier. You could say our timing was good, because smaller companies indeed had to invest in online marketing at a rapid pace so as not to disappear from the market.
At the same time, it is a huge opportunity for them to grow very quickly. We wanted to enable strategic action and growth for companies that do not qualify for traditional forms of financing, such as a bank loan or venture capital funds.
This way we fill an existing gap in the market, making it easy to raise capital. And that is one of our main principles – simple financing terms and quick access to funds.
This article was created as part of Adequate’s cooperation with Booste. Interview by Witold Wrodarczyk.
