Highbeam, a startup that provides banking, credit information and cash flow information to e-commerce customers, today announced that it has raised $10 million in debt from Triple Point as it looks to expand the reach of its digital product portfolio.
Co-founders Samir Shergill (formerly Microsoft, McKinsey and AppNexus) and Gautam Gupta (formerly Shopify, Venmo and Alloy) have spent years working with eCommerce companies to help them grow. Together, they came to the conclusion that while online brands were built to maximize revenue growth, aided by an increase in technology and marketing solutions, eCommerce is inherently capital intensive and low margin. They believed that the missing link to building a sustainable business was effective cash management and responsible use of credit.
“Having seen firsthand the frustration of dealing with legacy banks, accounting firms and predatory cash advances, we set out to build an e-commerce banking platform that allows brand operators to manage cash flow in real time, access fair credit transparently and grow profitably, Shergill said.
To that end, Highbeam – which typically works with “founder-led” companies with revenues in excess of $1 million – provides a range of financial services and tools centered around the needs of the e-commerce brand. Using the platform, customers can create bank accounts, enjoy free wire transfers and get a debit card with 2% cashback on all purchases. (Highbeam works with Blue Ridge Bank to provide banking and debit card services and The Currency Cloud on payment services). automatically categorizes income and expense transactions.
Metrics go deeper. Highbeam’s “vendor view” gives brands a real-time overview of where, exactly, their money is going. Spend tracking analytics alert customers as vendor costs fluctuate, giving them a chance to manage expenses before they become excessive.
Highbeam’s credit product is an income-based fixed-rate line of credit that allows customers to withdraw and repay loans on demand. Shergill argues that it is a big differentiator in that it is “fair and flexible” versus a fee-based merchant cash advance, which tend to be more expensive and rigid in their terms.
For context, Highbeam rival Wayflyer takes a similar approach to e-commerce lending — using analytics and sending money to merchants to make stock purchases or investments in their business. Merchants repay the loans using a percentage of their income until the money is repaid; merchants are using their income to get funding hence the term income based funding.
The upside, say companies like Highbeam and Wayfler, is that retailers issue refunds as a percentage of their sales. If they have a slow month, they pay less.
“For many brands, today’s economic headwinds have led to significant uncertainty around sales and inventory planning,” said Shergill. “Highbeam’s e-commerce focus helps brands establish solid financial foundations, facilitating effective cash planning and spend management.”
Highbeam finds itself competing with a wide range of fintech vendors, including commercial cash advance providers like Shopify Capital (and also the aforementioned Wayflyer, Clearco and Onramp Funds); spend management and accounting services like Quickbooks; and corporate card companies such as Ramp and Brex. Ambitious? Maybe – especially for a company with just $7 million in capital. (Highbeam raised $7 million last spring from Mayfield and FirstMark.) But Shergill insists Highbeam is expanding rapidly, achieving 30% year-over-year growth and annual cash flow in the hundreds of millions.
Certainly, Highbeam’s market – e-commerce – shows no signs of slowing down. Statista estimates that US-based eCommerce revenue reached $905 billion in 2022 and predicts it will reach $1.78 trillion by 2027. Online shopping remains one of the strongest and fastest growing digital sectors , generating new multimillion – dollar businesses every year ; a separate report by Statista found that unicorn e-commerce startups represented a nearly $114 billion industry in 2021.
“We grew primarily through customer referrals, but will now increase hiring across our sales and customer success functions,” Shergill said. “Highbeam’s core value proposition is helping brands make smarter decisions about profitability and cash flow, which is an important focus for everyone in this environment. Highbeam is well-positioned and well-funded to provide the tools brands need to grow sustainably and profitably.”
I should note, however, that Shergill did not elaborate when asked why Highbeam chose to raise debt over equity, nor did he reveal the size of Highbeam’s customer base. He also declined to give a rough estimate of the company’s annual recurring revenue, citing competitive reasons. Make of it what you will.