As part of the ShareBuyers’ going for growth series, we take a look into the growth prospects of Supply@Me Capital (SYME) – the financial technology business that is aiming to redefine how businesses across the world access working capital.
With the share price of SYME soaring by 1300% in the past few weeks alone, its disruptive innovation has caught the eye of many investors who begin to take note of the potential for its platform to innovatively support businesses in generating cash flow.
Find out why Supply@Me Chief Executive Officer Alessandro Zamboni is buoyant on the future of SYME and how he’d pitch the business to Warren Buffett if he unexpectedly bumped into him!
Firstly, please tell us a bit about Supply@ME Capital and its value proposition.
Supply@ME enables businesses from across the world to free up cash from their inventory, optimising working capital needs. We convert their inventory into asset based securities which are sold to institutional investors, and will pay them the face value of the products in exchange – a model that had never been available to businesses until we launched.
For instance, if you were a wine distributor with millions of pounds worth of stock locked up in warehouses, you may want to keep that wine in your warehouse until the Christmas season, when distributors and retailers will have higher demand and may pay more for it. In any case, you would still need money to keep producing the next year’s stock, to hire more staff, to fulfill another large order, or simply to pay the storage and insurance costs. Supply@ME could take that wine and unlock the capital it holds, enabling you to keep operating and growing even if the stock isn’t moving.
The thing that makes our model so different to anything that came before is that we don’t offer business finance. When a company signs up to Supply@ME, they don’t take on debt – they receive cash via a commercial transaction (the company advances the sale of its inventory to Supply@ME and continues to physically manage the goods in order to sell them to the end customers as usual). This means that it does not affect their credit rating and their relationship with the banking system will improve.
I believe that this innovation has the potential to totally transform how businesses access working capital.
The current climate is presenting challenge and opportunity – how has this applied to Supply@Me?
The COVID-19 pandemic has thrown many businesses and wider economies into disarray. Most governments have offered different types of support loans to businesses of all sizes, but many of these finance schemes are simply kicking the problems for businesses further down the road, with interest on repayments set to stifle growth for ambitious businesses for months or years to come. However, we believe that Supply@ME has to potential to be instrumental in enabling businesses to trade through and beyond the pandemic.
Many firms will have unsold stock as a result of the pandemic, with retailers almost all struggling internationally. Other firms need to buy more inventory in order to ensure the business continuity of the supply chain to the end customer (typically the anchor company of the entire supply chain).
Businesses that showed promising growth before the pandemic have now been held back. Many of these companies are sitting on a wealth of potential working capital which they could use to pay their staff or office rent, or to harness an acquisition opportunity to help them emerge stronger. Supporting these businesses won’t be achieved by sinking them further into debt, via loans from banks or governments – with Supply@ME’s support, they can unlock equity and generate new cashflow despite these difficult market conditions.
Growth catalysts are crucial to business growth – what do you believe yours are?
There are a number of initiatives which will drive growth for our business. The demand for Supply@ME from businesses is clear and each funding round we complete represents a key milestone for our business.
We are working on two models of funding businesses, the first is through our securitisation “open market” programme, where we sell, with the support of authorised intermediaries, inventory backed securities to institutional investors. At the moment, we are managing a placing of €400m (£360m) from global asset managers, that invest through the platform into portfolios of inventory assets via Securitisation Special Purpose Vehicles.
This will enable us to buy the first tranche of stock from 40 companies – with a further 57 in the pipeline. In addition, potential partnerships are progressing with two leading Italian banking institutions that intend to use our platform to service their existing customers, whilst also providing the inventory funding capital. Getting working capital into the hands of ambitious companies is our main aspiration, and so having these major steps on the horizon is extremely exciting for us.
We are also preparing to launch our pilot in the UK, with plans to buy £200m worth of stock from British companies in September. In addition, on the 10th of August we announced our expansion into the Middle East. We have signed an agreement with a leading Emirati investment company, iMass LCC, to facilitate our first pilot in the region. Moving forward, we will continue to undertake similar pilot schemes to build our international presence, in particular we are exploring the US market, and provide working capital to an ever-wider pool of businesses.
What are the biggest headwinds you foresee to achieving growth in the coming months and years? How will you tackle them?
Supply@ME is unique in that many of the headwinds that would normally negatively impact businesses can present opportunities for us. If the appetite for banks to lend to businesses is lower, we can step into the breach and fund businesses. If the market is weak and institutional investors are looking away from traditional investment classes like equities or bonds, we can offer them a position in marketable inventory. At both ends of our business model, we are built to thrive during periods of economic uncertainty.
The only real barrier to our growth at this point is awareness. We want to make sure that as many businesses and investors as possible are aware of what we are offering so that we can help more businesses unlock their capital.
Imagine you find yourself in a lift with Warren Buffett. What would be your ‘elevator pitch’ to summarise why he should invest in Supply@ME?
Funding businesses is an ancient practice, which hasn’t fundamentally changed since the 1980s with the shift away from bank financing to bond financing, and the market has been in dire need of a new way for businesses to access working capital. There have been some innovations in the world of alternative finance, but these have fundamentally relied on the same underlying mechanic: securitised debt. Supply@ME is the first major total rethink of how businesses source working capital in decades. There is a a huge, world-wide, working capital market made of trillions worth of needs, the only player which provides a unique inventory monetisation scalable scheme is Supply@ME.
Please note: this discussion with Alessandro Zamboni, CEO of Supply@ME Capital forms part of the ShareBuyers’ going for growth series – helping companies with high growth potential to share their story. It is not a recommendation to buy or sell shares in Supply@ME Capital.