Lessons From Investing $120M+ Into 100's DTC Brands⎜ Uncapped ⎜ EP 184

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This is a podcast episode titled, Lessons From Investing $120M+ Into 100's DTC Brands⎜ Uncapped ⎜ EP 184. The summary for this episode is: <p>Ryan Cramer of Crossover Commerce talks with Asher Ismail of Uncapped one-on-one as they discuss lessons from investing $120M+ into 100's DTC Brands.</p><p>---</p><p>Crossover Commerce is presented by PingPong Payments. PingPong transfers more than 150 million dollars a day for eCommerce sellers just like you. Helping over 1 million customers now, PingPong has processed over 90 BILLION dollars in cross-border payments. Save with a PingPong account <a href="https://usa.pingpongx.com/us/index?inviteCode=ccpodcast" rel="noopener noreferrer" target="_blank">today</a>! </p><p>---</p><p><strong>Stay connected with Crossover Commerce and PingPong Payments:</strong></p><p>✅ Crossover Commerce @ <a href="https://www.facebook.com/CrossoverCommerce" rel="noopener noreferrer" target="_blank">https://www.facebook.com/CrossoverCommerce</a></p><p>✅ YouTube @ <a href="https://www.youtube.com/c/PingPongPayments" rel="noopener noreferrer" target="_blank">https://www.youtube.com/c/PingPongPayments</a></p><p>✅ LinkedIn @ <a href="https://www.linkedin.com/company/pingpongglobal/" rel="noopener noreferrer" target="_blank">https://www.linkedin.com/company/pingpongglobal/</a></p><p>---</p><p>You can watch or listen to all episodes of Crossover Commerce at: <a href="https://usa.pingpongx.com/podcast" rel="noopener noreferrer" target="_blank">https://usa.pingpongx.com/podcast</a></p>

Ryan Cramer: What's up, everyone?. Welcome to my corner of the internet. I'm your host, Ryan Cramer, and this is Crossover Commerce presented by Pingpong Payments, the leading global payments provider, helping sellers keep more of their hard earned money. Hey everyone, happy Friday, and welcome to another episode of Crossover Commerce. My name is Ryan Cramer, and this is my corner of the internet where I bring the best and brightest experts in the Amazon and eCommerce space, also extends out farther than the reaches of just those topics, of course, but we want to bring people who come onto this podcast to help you apply applicable information, help your business grow, and be successful today. Not tomorrow, not a couple months from now, today. So with that being said, this is Crossover Commerce episode 184. If you haven't been a part of this podcast, or if you have listened to this before, you know it is presented by Pingpong Payments. Pingpong Payments is a cross- border payment solution. What does that mean? It means it can help you save time, money, and effort by sending international currency in localized amounts. That means you can pay your suppliers, your manufacturers, your distributors, your VAs, whatever it might be. If you're working with them in internationally, you can send them localized currency. Don't pay those fees that banks charge you or any sort of other outside institution. Save on international conversion fees with Pingpong Payments. If you're also receiving from different marketplaces, internationally receiving from Canadian dollar, the Australian dollar, the pound, the Euro, or whatever that might be, it can be done all through Pingpong Payments. Go ahead and sign up for free today by going to usa. pingpongx. com/ podcast. That way you can go ahead and see every one of our episodes that we've done in the past, sign up for free, and then also watch or listen to all of our available podcasts. They're going to be on your most popular destinations as well. So as long as you search for Crossover Commerce, that is where you can listen to all of the great content that we've produced over the past year and a half or so. Today is Friday, so wherever you might be listening to us, whether it be afternoon, evening, morning, as sometimes on the West Coast if you're here in the United States, we appreciate you tuning in just for a little bit of your time on a Friday, possibly Saturday, wherever you might be located. But the reason it's live is because we want to bring you relevant information. And also that our audience, if you're listening to us on those Facebook, LinkedIn, YouTube, or Twitter channels, you can ask your questions directly to our guests. So if you have a question or if you want to say just hello, go ahead and do so in the comments section below. If you're listening to us, again, go ahead and write in the comments section of the show notes. And you'll also be able to talk with us, ask your questions and we'll make sure you get in touch with our guest today. But about our guest today, I don't want to leave him hanging for too long. Our guest today comes from the company of Uncapped, his name is Asher Ismail. And we've titled today's episode lessons from investing$ 120 million into over 100 D2C brands. That's a lot. That's a lot of company interactions. That's a lot of investing and helping companies grow. But he and his company are one of the fastest, most affordable ways to fund marketing inventory or hiring. And they're leading the way in those kinds of stages for SMBs and enterprise level brands with no ties to any sort of, and I'll let him speak on this too, of course, but really just an innovative way to help businesses grow by investing into a vision and into a company by using data. So that being said, want to welcome to Crossover Commerce, Asher Ismail of Uncapped. Asher, thank you for joining Crossover Commerce.

Asher Ismail: Hey, Ryan. Great to be here.

Ryan Cramer: Yeah. And you're joining me from the UK, correct? We talked about this pre- show. What part of England are you in?

Asher Ismail: I'm actually based in London. I'm originally from Toronto, Canada, hence the funny accent. But I originally came here for 12 months and it's been 12 years. So this is home now.

Ryan Cramer: Oh my gosh. That's amazing. London, my third favorite European city that I've been to. Very closely behind Paris and also Rome. So love London, have great friends in London. Just a beautiful city, just lots of happen there in the tech scene, finance scene. But that's amazing. So born in Toronto, grew up there and then obviously moved across. Why did you move across? What was the opportunity? Tell me about your background. And you've been featured in Tech Crunch, Forbes, really a huge publication. So you're kind of a big deal. And I would say fascinating background, but for people who may not be familiar with Uncapped or you yourself, what was that journey like for you up until this date?

Asher Ismail: Yeah, well, my background's in startups. Uncapped is the third business that I've started over the years. And probably the biggest problem I always had was getting the funding I needed. So working with hundreds of eCommerce founders, I've also seen how they struggled. So for me, it's a dream to get to work at Uncapped. Every day I get to help other entrepreneurs get the funding they need. And our first customers as well were my friends. So from the start, we really tried to create something that is fast and fair and friendly and everything that you'd want to give to a mate. The company was born probably out of the frustrations I faced when I was running my first business. I started back in 2003 and I was young and I just wanted to raise 100K and I probably went to 100 meetings and got 100 no's. And I didn't want to take financing from the banks either because they all wanted personal guarantees. And venture capital, it wasn't ideal either because I didn't have that track record or connections or a warm introduction. So I just repeatedly missed out on growth opportunities.

Ryan Cramer: Interesting. I was going to say, yeah, I think everyone can relate to that story. So, sorry, I didn't mean to cut you off. That such a great story from the beginning. And how'd you overcome all of that basically?

Asher Ismail: Well, I guess it kind of continued, like when I was raising money then for my second business, I was in the UK, and I thought I had it figured out. I ended up raising millions in venture capital, but then I got terribly diluted and I just started to realize that the options for me were really limited and it was kind of depressing to think that I could work so hard and own so little of my company. And I just started to notice that it wasn't just me, it was like growing businesses were just often left to choose between either raising costly venture capital or burdening themselves with traditional debt. And so I thought there must be a better way. And I started to work on Uncapped basically to try to give them a more friendly way to first fund businesses in Europe and now North America. And I guess since we've, as you mentioned, we've given 120 million plus of funding to businesses who've gone on to create tons of jobs and opportunities. So yeah, it's been really cool to be able to see those founders own more of their businesses and save in that dilution.

Ryan Cramer: DI was going to say, so what you said, you founded three companies, what was that first company that you were having people try to buy into? And you said there's lots of people who would give you that, but they would basically take essentially a piece of the company which would be profit or shares into the company if you grew on that, right? What were those companies?

Asher Ismail: So my first company was a business called Make It Matter that was a marketplace for social projects. So imagine you had an idea to improve your community, like say, Ryan, the wall your school had been graffitied. You could take a picture of that, put it up on Make It Matter, and somebody else who maybe was in your community, maybe was an alumni, would see that and say," Hey, I want to actually give some funding to that." So they would make a donation. Somebody else would give some time and say," Hey, I know how to paint. I'm an artist I'm going to make that part of it happen." And then we had partners, like for example, L'Oreal was our partner in creativity. So whenever somebody funded a project in the arts, L'Oreal would match that donation. And we then say," L'Oreal makes it matter." And yeah, it was great. We got hundreds and hundreds of projects funded and going and a variety of really cool partners. But still that fundamental struggle of getting the capital to really take it to the next level was the challenge.

Ryan Cramer: Right. So you learned from that project of taking it from one step further into your next company and then onto Uncapped. So that struggle, it always sounds like raising funds. And that's what I think is the most, it seems like the easiest way for people who have those connections to capital and who have that great idea. It's is it a relationship business or is it more of a thought and idea business where a lot of people think," If I have a good idea, I should be able to have easy access to capital"? Is it a little of both or one or the other?

Asher Ismail: Well, we're trying to change the world, so we make it a little bit more that way. I think definitely in the world of funding, historically, it has been very much a relationship kind of game. And especially, if you want to raise equity, it can be one of the most challenging experiences that a founder will undertake. Because inevitably, it's going to take dozens of meetings and conversations to make that happen. And along the way, you'll meet some investors who are genuinely interested in your business. But you'll also meet folks who are, for example, only speaking to you because they're actually interested in investing in your competitor. Or you'll meet another investor who says," Hey, I'll back you, but only if somebody else would lead this." Or another investor who will ask you tons of questions about your future financial plans when you both know that it's a bit of hogwash. But ultimately, if you're going down the route of equity, you'll meet one investor who does get you and wants to back you. And I think that's the thing, in that will world of investment, all it takes is one person to finally say yes. And so for me, at my last company, or the previous one, it was I met actually a person who maybe at that hundredth meeting took pity on me. They were actually a philanthropist. And so they gave me that initial funds, but they ended up opening a bunch of doors and being really useful and building that model.

Ryan Cramer: That's amazing.

Asher Ismail: The challenging thing of course, is that so many people don't necessarily meet that person. But the other part of it is that all that time that I spent or perhaps some of your listeners have spent trying to chase those funds is time that you're not growing your company. Really, as an entrepreneur, you want to be solving a problem and spending your time focused on your team and your customers. And getting that done faster means you can really get back to growing your business. And so with Uncapped, I think we've tried to create this new alternative way of funding companies, where you can skip those steps and actually get the funding that you need much quicker.

Ryan Cramer: In your past, in your experience, are entrepreneurs pretty insightful how much they need? Or do you think a lot of more businesses over ask or do they under ask? Is there a lot of like discrepancies when you're looking through all these potential people to come in? They're like," I need 10 million dollars." And you go," What for?" And they say," I need it for marketing." And it feels like that's always a conversation that you see on like either Shark Tank, or I'm assuming in board meetings, off when they go into a or go to a company like Uncapped, is it completely off of what they actually need and it's your job to reign them in and say," Listen, if you really want to work on this, you only need this"?

Asher Ismail: Yeah. Obviously there's a range of asks that you get. I think a bigger danger is folks who don't ask for enough funds. And I think what it really comes down to is thinking about your fundraising milestones and planning for that. So if you are a seller and you know that you are going to have a huge Q4, you want to be thinking about that and planning for getting that next set of funding that gives you the funds you'll need to unlock that additional growth. And perhaps even some more funding, because as we all know, there's been some massive supply chain challenges that so many eCommerce companies have been facing this last period, where they want to actually stock up and have that additional access to inventory. So if there is a challenge, they can overcome it. And I think knowing that's critically important. If you're earlier in the journey though, and you're more going to an investor, I just try to think, imagine if you were on the other side of the ask. Would you give this person the money with all the information they've shared with you? And wouldn't you want to know what's going to happen to the funding? So I think a great way to think about is like, if you give me 10K, I'll be able to do this. If you gave me 50K, here's how the money will be used. If you gave me 25K, part of it's going to go towards making the prototype. And I found a company that's going to do it, and they're going to charge me 20K and I need another 5K for design. And now you start to have a little bit more confidence that this person is actually going to spend this month wisely, and that me as an investor will get a return. And I think having that confidence and understanding just makes you much more investible.

Ryan Cramer: Right. So in that regards, you guys are trying to change the way how people look for it. You alluded to earlier investing came from either going through banks or going through funds or anything of that sort. And as an entrepreneur, I can't even imagine where to even have that educational model, wherever that exists, and then try to figure out," Who should I go through? How's that going to affect me in my business on the underlying models." So what was the old way of doing this business and they're evolving and changing ways and how is it different from other companies might exist out there like that?

Asher Ismail: Yeah. So the traditional models that people have had to fund companies up till today is basically debt and equity. So every funding agreement typically revolves around those two models. And both of them have their challenges. And I kind of alluded to some of those where debt typically requires personal guarantees and compounding interest, and that basic high level risk that's being taken on you, which so often entrepreneurs can access. Typically a bank will want two years of history before they're really going to give you access to any significant in capital. And if you're in the days right now of eCommerce, hey, you are starting out much sooner than that and wanting to monetize your business. Equally with equity, the challenge of course is giving away control and giving up that share of your company, because once you give it away, you can't get it back. So it effectively is the most expensive way to fund a company's growth. And our idea is to create this new alternative to that, which is centered on this belief that founders, they shouldn't have to give away ownership of their company to fund growth. So we provide equity and interest free investments that start from 10K up to 5 million. And we charge a flat 6% fee on the capital we provide. So businesses only actually repay us the capital as they make revenue. There's no set repayment date, there's no compounding interest, equity, or personal guarantees. There's also no pitching. And so forget the model about having to prepare this detailed business plan or meet a bunch of investors for coffee. And so it really means that you can get back to growing your company.

Ryan Cramer: So basically, if I'm earning X and they need to borrow$10, 000 or something like that, you're just charging 6%, which would be what?$ 600? Am I math doing that correctly? Yeah,$ 600 and that's it. So they would get that all up front. How does that work in that model? Because if I'm asking 5 million and I don't make that back, you might be out 5 million if you give that all to somebody. So I'm kind of curious how are you guys mitigating that risk as well?

Asher Ismail: Yeah, so with an example, if we were to lend you 100K to spend on marketing, we take back a fixed portion of your daily revenue, which might be like, say five or 10% daily until we get a total of 106K back. So there's no hidden fees, you're just paying that 6% flat fee. And yeah, of course it requires us to be really smart about who we give capital to, but our approach is really different as well. So what we do is we connect to the data sources that your company already uses to run. So we'll connect to your Shopify account or your Google and Facebook or to your accounting software. We have a hundred different ways where we can use APIs to connect to your data and understand your business with this 360 degree view. And then what we can do is, use a data driven approach to actually get you an offer within 24 hours. And amazingly, that also just removes a lot of the bias because what's happening when you're going to a bank or when you're going to an equity investor? Of course, there's challenges in terms of who they decide to let inaudible capital to, they're effectively pattern matching based on you as a person. Whereas what we're trying to do is really evaluate your business and make sure that then the founders who really deserve capital have access to it in a much faster way.

Ryan Cramer: Gotcha. If I'm a business owner, this might sound like a silly question, how do I know that I am ready for funding? Or how do I know I need it? Is there a difference or is there a time or a metric that you guys look at or a business owner can look at when they need it?

Asher Ismail: Yeah, absolutely. So Uncapped is great for you if you are doing at least 10K of monthly sales, you've been around for at least six months, and you have some good unit economics developing. And the reason for that is that we think at this stage of the business, when you've gotten to a place where you're generating that 10K per month, you've probably gotten away from the inaudible where this is a side hustle. You're starting to think," Hey, I've gotten this to a place where actually this could be a real business. I could scale this. I could do this, start to do this full time and be able to afford that." If you have that good unit economics that you found, you're ready to take it to that next level. And effectively what we want to do is give you the funding to unlock that growth option so you can actually see how it could play out. Or if you're later in the journey, we've also worked with much larger businesses who are at a state where they just want a more affordable source. They want this flexibility where they know that the payments are going to actually be connected to the revenues. Because I think, for me, in both my businesses, one of my greatest worries always was," If I go and take out a bunch of debt, what if I can't afford to pay it back?" And here, the repayments totally flex with your revenue. And it just gives you that comfort and confidence to be able to go out and place those bigger bets. If you see that opportunity coming up in Q4 and you want to go after it, now you have the confidence to go and do it.

Ryan Cramer: Right. So it's on you and your team to actually have this access of fluid funds too, as well, because people are coming and going. Is that hard as a business owner? I'm just curious on your end, on the back end, of what do you expect on a day to day basis of," Hey, we could have a really good month this month and not hit that projection next month." So is that hard to project a base minimum of a business that's having a recurring revenue come in when your whole business model is around fluidity of money, essentially?

Asher Ismail: Yeah. So what we've done is we've looked at thousands of businesses and analyzed their data and understand the patterns. We've built some amazing algorithms that help us understand and predict how businesses in different categories are going to perform. And we use that to make a lot of our decisions. We also use that to help the companies that we fund. So we like to think we're the smartest money that a founder could get, because we're also able to turn around those same insights we use to help decide which companies to lend to, to also help those companies unlock the opportunities that are in their data, that are in their marketing. And also connect them to other partners who can help them accelerate and get to that next level of growth.

Ryan Cramer: Gotcha. What about in terms of when you guys raise funds? Did you find it hard? Because it's not hard to look on your website and see you guys raise funds as well. Was it hard to take your own advice and to go to investors or angel investors or VCs or however, I don't need to know details, and put that model in front of them and say," This is why, what you might be doing, this needs to be different and fluctuate based on what we're asking you. Our business model is different than what we're actually approaching you for." Was that a weird catch 22 of presenting yourself in front of investors?

Asher Ismail: Well, it is kind of funny that we're basically presenting an alternative to venture capital. But of course you raise money from really incredible venture capital investors, some of the best funds in the world. And it may seem counterintuitive, but it's actually quite strategic. Because we're raising money to actually build a new asset class. We're effectively fundraising so that you don't have to. And I think it's not to say that equity is necessarily bad, equity is just a part of an entrepreneur's tool kit, but what we believe that is fundamentally the wrong tool to fund the repeatable parts of your business. For example, digital ad spend or inventory. So we encourage companies to actually spend equity on technical risk and R& D. And that's exactly where we put our money because we're investing in building the technology and artificial intelligence to be able to make these kind of forecasts and fund companies in new environments. And so yeah, doing that fundraising effectively, so other folks don't need to.

Ryan Cramer: Right. I was going to say, there has to be a part of the business where you would prefer to have people take money and apply it to you That repeatable portion, whether it's in inventory of goods, something where they can even tap back into you and have that business model where it repeats over and over again. Is that where a lot of people struggle with is," I think I know how to sell, so I need access to marketing." And that's where they get in that catch of equity to your business. I think I saw where you were going with, you don't want to give away equity in your business just to apply to marketing, which doesn't have that repeatable sort of business to it. But you guys are kind of pushing in the different direction of," Hey, let's get you more inventory so you can sell more, so you can reinvest into your company in that regards." Is that more of the wheel you want to create?

Asher Ismail: Yeah, absolutely. Because, I guess, inaudible way of putting it, but why have a different capital allocation strategy for your marketing versus perhaps the R& D part of your business? And you can just look to like much larger companies, and you see effectively that's what a CFO of a large enterprise prize would be doing. They would have different capital structures that exist for different parts of the business. Like if you want to fund an asset that you have, you might use one methodology for that. If you want to fund another part of your business, you have another method for that. But of course, that's really complex for a small business to go and try to execute on it. And so we're trying to instead make it an easy way to go and do that. And I think marketing is the best example, because if you know that you already put one pound into Facebook and you get three pounds out, it's really silly to then give away equity in your company to go and fund that, because you're going to get that money back tomorrow. So what we're saying is that's a repeatable, predictable part of your business. Using a funding model like revenue based finance and what we're offering at Uncapped, just gives you now the ability to make that way more affordable, because instead it's only costing you 6%. So if you were getting a three X ROAS previously, you pay a 6% fee, you're still getting 2. 94. And alternatively, it would be saying," I'm just not going to bother going after that customer because I just can't afford it right now." And in case you're getting zero. So when you're comparing zero to 2. 94, it's pretty clear that that's a bet you should take. So that's kind of the model and the very simple way of thinking about how founders should go and approach this.

Ryan Cramer: Gotcha. So for everyone who's tuning in and listening to us or just hopped in, I have Asher Ismail smell of Uncapped talking raising funds in a non- traditional way. I guess my question for you, Asher, is what doesn't this model exists already? I would think that, is it maybe this is takes a longer road in order to earn revenue for your business quicker in that regard and that's why people tend to go towards capital? Or why is this model different than every other ones? That's why I'm guessing it hasn't popped up until now. Because this seems very helpful and useful. And a dummy like myself, that I can see the basis around this. It makes sense to me, and it seems win- win for both sides. So why doesn't that model exist out there more or ever before?

Asher Ismail: Well, I guess I would just say that the historical model has been based on just the way we've always funded companies. And you definitely see this approach of thinking about having a royalty model or a revenue based model in other spaces, we just haven't applied it to eCommerce. And I think why now is financially because the data available to make decisions like this just wasn't available before. But now, most eCommerce companies run on a distinct set of platforms. There's APIs available to almost all of them. So we're able to actually get that understanding and make these kind of forecasts in a way we couldn't do before. And I think that's one of the amazing things about technology, if you're in the right place at the right time, you can really capitalize on it. And for us, we've grown exponentially. So our company's been around for two years, but now we are deploying hundreds of millions of dollars. We're in 22 countries, including the US, UK, Germany, Poland, Spain. And we actually fund more businesses in a day than a typical VC will fund in a year. So it's, I think, really clear to us that entrepreneurs are seeing this as the new way to fund their companies. And it's just really taking off.

Ryan Cramer: I was going to say, so instead of you just servicing UK based businesses, obviously you guys made this an international play too. So what are the complexities of international commerce at scale that you would have to look at differently? Because data sets are going to mean different things from country to country. Market shares are going to be different, there's going to be different pieces of pie that are greater. Obviously, if you can look at Amazon's model, you know where the top market, places are. You go United States in terms of searchable economies, you go US, UK, Germany, then you go Japan. And those are the top four, traditionally. So when you look at different countries like that, what are the things at play that maybe you have to tweak in that regard?

Asher Ismail: Yeah. You know what's funny? I would say our challenge compared to the challenge of our customers of going international is we have a much easier job. Because with our customers, they have physical supply chains where they need to think about managing that and understand all the partners and the 3PL, and understand really different sets of customer requirements and local tastes. In our case, we're a bit lucky because entrepreneurs across markets and eCommerce think international typically from day one. So the vast majority of our customers are thinking about how they can already work internationally across businesses. And most of the tools that they use are also similar across markets. It's incredible to be able to see how tools like Shopify, for example, have expanded around the world. Of course, in other markets, you're going to see in Europe, maybe you'll have PrestaShop shop being more common. But there's great similarities in the thinking and structuring of that data. And that's allowed us actually to move really fast. Probably the biggest differences that we need to deal with is more about understanding, how do we talk to customers in different markets? How do we make sure that we do all the legals that are required in a really simple, beautiful way? And that's one of the other things we've always had as an advantage for our company, is that a typical funding round that you do with a venture capitalist or an angel investor even, often requires tons of legal documentation and expensive fees to go and get it to close. With us, our agreement is six pages, it's written in plain English. And so founders can just feel real confident in terms of what they're signing and be able to execute on it quickly. And we want to have that consistent promise across the world.

Ryan Cramer: Amazing. So where are you guys finding that most people and your customers are operating? Is it direct to consumer channels? Is it different marketplaces? What are those kind of breakdowns right now that you're seeing?

Asher Ismail: I'd say probably the most common is Shopify. And obviously Shopify has exploded in this last period. We've seen 10 years of eCommerce growth in three months of the pandemic. And so many founders chose to use that as their tool of building their company. So we've been able to fund lots of business in that space. But also, other sellers, because of those platforms and tools, have made it really to get started and get connected are also really popular. It's amazing to see just how many folks are actually using Amazon as a channel and really thinking about how they can extend their brand. If they're already on one platform, thinking about how they can also use that as a channel. And we really encourage founders to really think multichannel or omnichannel from the start and really build a diverse business. So yeah, it's been great to support founders in lots of different ways.

Ryan Cramer: What was the most surprising or unique way that someone approached you and your team that needed capital or wanted access to it and it made you double check and make sure you read that correctly? Whether it be a good or bad thing. Or something like you had to show your co- founder and say,"Did you see this come through?" Like make you laugh or just make you stop in your tracks and have to look at it again.

Asher Ismail: Well, one of our first customers was a sustainable fashion brand called Headwind. And they based on this problem that so many entrepreneurs in fashion have where there's such a juggle in cash between inventory and marketing. So like they'd have to basically wait for the current season to sell so they could invest the returns with the next one. So it's sort of like a step ladder kind of growth. And Alex and Anna are the founders of this company and they're incredibly savvy. They both come from finance backgrounds. So they had looked at like every option to try and fund their business. But we managed to convince them to sign up with us. They took a 50K advance in 2019 and they used the money for inventory. And incredibly, in Q1 of 2020, we got the reports back from how they were doing, and we saw their revenue had jumped 11000% compared to the previous year. And I remember going to my co- founder and just thinking," Oh my God, there's something wrong with the system. It's broken. We've over collected the amounts that we're supposed to get repaid." And we're freaking out. And we realized, no, actually this business, now that they have the access to the capital that they need, they've actually been able to grow at this level. And I think it's super inspiring to see what actually is possible when you take the right entrepreneur with the right business and just get them the capital they need to grow.

Ryan Cramer: I always have this notion that, Asher, when a lot of businesses that fail, and again, there's a lot of people that do statistics in the Amazon world of 6 million, 6.4 million or so sellers now it's 1. 5, why so many fail. And I would almost think, because other than just some other, in terms of the marketplace, other barriers that they have to overcome, there's a lot of different people I think that just don't feel like they can scale further. There's a pretty healthy amount where they're sitting and they feel comfortable, but it's in that 10 to$50,000 a month, I would say, most often. And it's that seller that doesn't know how to get to that next level. But I feel like they lever to pull in every single time in those situations is the access to capital in order to say," I can take this really great case study and build it larger," most often than not because of the inventory issues. And I think that's almost 90 to 100 percent of the time and issue for those middle sellers. Is that what you're seeing as well?

Asher Ismail: Absolutely. And I think especially in the current times. So like one of our customers, they were talking to me about the fact that they currently have one of their big shipments, it's sitting in the ocean. It's supposed to be coming over from China, but it's stuck. And they kind of have felt like they just have learned from this lesson, I suppose. They already actually had tried to do something that I think a lot of founders are doing ahead of this, which is realizing that if you order a bigger shipment, you can get a discount often from your partner. And the way to unlock that is, well, if you can get capital to let you do that, can you offset the cost of the capital with the savings that you're going to make in that inventory shipment? And to your point about founders who are stuck at a certain level, it's because, hey, their margins are only pushing them to a certain place. And if they could actually access a deal like that, they could take their business to that next stage. And so I see things like that happening all the time and it's really great if we can help an entrepreneur get funding at a 6% fee and really offset the cost in that way and be able to go and unlock that additional growth.

Ryan Cramer: Yeah. Why 6%? What the math behind that, do you mind me asking? Is it just because of competitors or anything like that? I'm curious, it's not a round number, but it's like what's 6%? Is that there's a lot of different fees and structures, not too much, not too low, that's Goldilocks of fees.

Asher Ismail: I think it's that, but it's also, it just helps us also make our own unit economics work in terms of what does it cost us to access capital and what does it cost us to find the folks who are working with us to acquire our customers? And there's some losses that we make as well, because although we want 99% of the companies to fund us back, there is that those few cases where it doesn't work out. So managing those different things and that cost structure, just to make it a win- win deal for everybody.

Ryan Cramer: Gotcha. I was looking as well, the funding doesn't stop at just sellers online too, because there's lots of different business models in terms of just online selling a product. Obviously you can do subscription based services, there's SAS models, there's everything like that. Do you guys touch anything along the service side or service provider side of it's not a tangible product, but it might be a service?

Asher Ismail: Yeah. Well, the reason why we fund really focus on eCommerce and subscription focused businesses, is because they're a little bit more repeatable and predictable. And effectively, we're just trying to fund any type of business where if we were able to give them that additional capital, they could really unlock growth. And I think the challenge sometimes with service businesses, it just depends on the service business. But often service businesses are very human centered. So unlocking significant scale is a challenge, because you're really depending on people to drive that growth. So it depends on the business and how they're offering the service and what they do. But you know that's kind of our thinking. We're really focused on those businesses is where they want more fuel for the fire, but they just don't want someone to take a piece of the pie.

Ryan Cramer: Of course. Yeah. And I think that's every entrepreneur's biggest fear is giving away a piece of what their hard earned work is doing. And the only reason that they're getting it is because they have access to that. And I'm assuming it's an emotional attachment or you're getting people at their either emotional lowest or their emotional peak, potentially, or they're on their way there. Because of the excitement of what they're growing, they just need that extra fuel to the fire. But I got this note, and I've heard it come you in some past articles I read about the company, is you tell people about a fundraising winning mindset. And I heard either, I forget, it was you or I read it on something else, that you said it's like dating. What is that type of thought process that you have?

Asher Ismail: Well, absolutely. I think when you're an entrepreneur trying to go after funding, it's not easy. It's going to be one of the most frustrating, time draining activities that you as a founder have to undertake as part of your company's growth strategy. And early on when you're a small team, fundraising efforts, just move far more time than you'd want them to. But if you want to raise equity at least, there is just no shortcut to that process. And so I think you do need to have a real strong fundraising mindset. One is just about planning ahead. So fundraising is just a process. It can take time and it's rarely quick. And the early you start planning your process and developing relationships, the better off you're going to be, and the more likely you're going to avoid fundraising in desperation mode. The other thing I would say is, having a winning fundraising mindset is about expecting rejection. Because you just have to embrace rejection as part of the process and not take it personally, because rejection just happens sometimes for good reasons, sometimes for dumb reasons, sometimes for reasons that will forever remain a mystery. And I think the other thing about it is that practice makes perfect. Because like every meeting that you go to with a potential investor, it makes you better for that next meeting. And so the success or failure of one meeting is never the end of your story, it's just a step along the way.

Ryan Cramer: I love that mindset. But have you ever felt that sense of rejection and you took it personally? Is that something where it just takes a little bit of time? Like you said, you've been to hundreds of meetings yourself, have gone through and have seen that rejection before. Is that jus a muscle you have to start working out? And no one likes getting rejected, I would think. If you do, then I personally don't know what's wrong with you. But I never like being told no, because you always want to have that sense of either you're right mentality or you also want to be on the right path. But obviously the natural expectations are there's always going to be those economies of scale, 50 years, something like that, of psychology. But is that hard to overcome and achieve in your mind?

Asher Ismail: Well, I think what you got to do is use those nos as fuel and basically learn from every no. So by analyzing what was said at those meetings, you can quickly learn to improve on your mistakes. And actually, that's the most crucial step in finding the right investor more quickly. Just like you analyze your company's metrics, it's really a good idea to keep track of all the questions that you were asked. It's a really good way of ascertaining like is your pitch still ambiguous? And then when you're asked a question, you have to follow up on those information requests. And if you get asked the same questions often, there's a chance that maybe you should be incorporating that into your presentation earlier or adding them to an appendix. And a final thing with that would be, you got to recognize that maybe in those first investors that you speak to are the folks that you want to practice with. And maybe don't put your best eggs forward necessarily first. So if you identify the top 10, maybe you want to save those companies for last or save those angels for last and put that list aside. And then when your pitch is actually really strong, you can then feel confident to be able to go to those and really nail it. And when it feels organic, you'll know it. And gives you that confidence to be able to actually go after the funds that you need.

Ryan Cramer: Right. What is the thing that you as an entrepreneur keeps you up at night that either you have heartburn at the end of the day or when you wake up or you wake up in a sweat? In a good or a bad way, what's those things that give you anxiety in that regards in this sort of business?

Asher Ismail: Well, for me, and actually in all my businesses, I just think being an entrepreneur is also a lot of responsibility. Because you have lots of folks who are depending on their livelihood for you. And that can be really stressful at times. And currently, we have 70 people who are on our team at the moment and it scaled incredibly quickly. But I think also I got some good advice about that in the past, which was just to remember as an entrepreneur to feel more comfortable with failure. Because by being comfortable with it, it allows you to take those bigger risks that ultimately will help you succeed. And on that question about the team, it's realizing that you've hired really smart, intelligent, capable people. And if something did not work out, all those people are going to have probably no problem being able to find other opportunities and continue in their lives in a very happy way. So I think it's just knowing that, gives you some comfort to be able to go out and take the big risks and make stuff happen and not have to have too many sleepless nights. And I think that's probably the advice I would've given to myself as well back in the day is to not be so afraid of failing and to just go for it.

Ryan Cramer: Gotcha. And Asher, I have Asher Ismail, again, of Uncapped with us. We're talking investing and the unique and different ways of funding businesses as it grows, especially in eCommerce. Asher, I know that this is a new company for you, two years old, you said. The fantastic things you guys are already doing in is incredible from what I'm hearing. What's that endgame for you and your team? Is there a market that you want to, not take over, but really empower people in? Have you not achieved that yet? Or what's the goal that you all are shooting for?

Asher Ismail: Yeah. Our overall vision is a world where every founder has access to the capital and knowledge they need to grow big. And I guess that just reflects my own experiences of being an entrepreneur and getting stuck at a certain stage. And until I had been able to find the right mentors and the right advice and the insights, that smart money, I was kind of stuck in one way. But also I really felt like if I was able to access capital on those fairer terms, I would've actually been able to build a much bigger business because I wouldn't have missed out on those growth opportunities. And so that's what we're trying to solve for every entrepreneur and find different ways to fund different cashflow cycles, people in different countries, people who are in different stages of their business, and unlock those opportunities for more entrepreneurs. Because fundamentally, I think it's entrepreneurs who are going to solve our world's biggest problems. If you think about what's happening in the economy or what's happening with the environment, it's really entrepreneurs who are going to come up with the solutions to those challenges. So if we enable them to create more opportunities, that's just a really inspiring thing to be part of.

Ryan Cramer: If you weren't in technology and fintech, I call it fintech, in economy and whatnot, what would your passions be in and what would you be building right now?

Asher Ismail: Well, I guess I've built a variety of different types of businesses before. So I mentioned I built a marketplace business. I built a insurance company. I had an eCommerce store. And I just have seen how all these different business models play out. And I think if I wasn't in building a business like this one today, I think more I probably would be thinking about how I could be working on actually just helping other founders and advising them to turn learning from the mistakes that I've made, maybe giving some advice about fundraising and other things. And I feel like that would be really rewarding.

Ryan Cramer: Gotcha. Well just kind of wrapping up here on the final minutes that we have on this episode, I'm curious, 2021 for a lot of entrepreneurs, I think, didn't go as planned in various different ways. A lot of people are still encountering lots of different barriers to overcome and it's just a little bit harder, more costly, or more headaches in terms of being an entrepreneur in the eCommerce world. What advice do you feel like you yourself give people more often now than you did in the past?

Asher Ismail: Well, I think this time has, as you said, has been a challenging time for some, but it's also been a time full of opportunity. We've been on this incredible growth journey of the world of eCommerce and I don't think it's going to go away. And it's unfortunate that some folks have struggled this year with supply chain challenges and other challenges. But I think the hope is to learn from that moment and being able to then capitalize it and make a really solid strong Q1 of securing the capital you need, securing the inventory you need, taking that moment to refine your business and your approach. And yeah, make bigger things happen in 2022.

Ryan Cramer: Amazing. What are the plans for you and the team in 2022? Are we going to see you out and about? See lots more events? Or is there a lot more, what marketing are you... Or is it just nose down pencils up and we're just going to keep accepting people? And or when's the next time up we're going to see and hear from the Uncapped team or yourself?

Asher Ismail: Well, I think when making plans, we definitely always think big. But when we make progress, we think small. So I think our approach in this next period is definitely just trying to serve more entrepreneurs. So we're trying to get to more markets. We're already in 22 countries, but we'd love to be deeper in them and really be able to really understand the next level of folks there, spending time in each of those countries. We're a fully remote company, so I have a luxury of being able to travel around the world and get to meet entrepreneurs in lots of different places. And I'm excited about that, because I think we've all been so limited in terms of where we could go in 2021. And so opening up the doors for that in 2022 is going to be an amazing change.

Ryan Cramer: That's amazing. And I know news just broke yesterday on it, I'm curious your thoughts too, Amazon announced that it wasn't going to accept Visa, I want to say it was Visa payments for either sellers or as entrepreneurs, because of the Visa and their negotiating. I'm not sure what your take is on that, and I don't want to put any words in your mouth. But do you have any sort of initial thoughts, ideas around that or takeaways on, in the payment world, obviously there's a fee associated with anytime someone uses some sort of payment, obviously with Visa using with Amazon, but Amazon is stonewalling and saying," We will not accept this anymore." What are your initial takeaways and thoughts on that?

Asher Ismail: Well I imagine that must be really impacting your world, of course, given count some of the work that you guys do of managing payments. For us, we see our customers, they use a variety of different payment platforms. And it's always a pain when that's that critical thing, that last step in the journey, and when there's an additional cost that then can get in the way of what the economics of your business, it's super frustrating. So I just feel for entrepreneurs who are thinking about that and being stuck in that situation. And I would say, what's the best thing you can do? You can try to find other areas of cost or can you accelerate your growth? And sometimes, yes, there's definitely a savings opportunity. You can get somewhere else to keep your margins going. But on the flip side, maybe there's an opportunity to get some economies of scale in another way. And so it's just thinking, continuously what I think every entrepreneur is trying do is, how can you tweak all the levers in their business to overcome that and try to still give customers the payment platforms that they want? The key debate of course is, do you just try to get your customers on a different payment platform? What percentage of customers do you lose in the process if you do? And I think that's the math and calculation and it's a tricky one. What would you say about that, out of curiosity?

Ryan Cramer: No, that's a good question. It's affecting a lot of sellers, and I know Visa is one of the more widely accepted payment providers. I'm doing a little more research too, and to dive in, it's been done in the past by Amazon for reasons of negotiating costs, of course. It's a, you can't not have it, and I know Visa knows that and Amazon knows that as well. So it's just very much a tactic of who's going to budge first? Which in the past, it only takes 24, 48 hours before the other side budges. So again, a platform as powerful as Amazon, again, has the ability to negotiate at scale. And when it comes to financial terms, that's kind of what they're working with right now. So again, it's a tactic that not a lot of us have the ability to put into play and has power like that. So I'm curious to watch it and see how it unfolds. And can't imagine the partnership deals that are trying to be unfolded right now and negotiated on that quick scale, if you will. So it's very fascinating for sure. A lot of people are watching it. But Asher, you and your team doing so much great stuff, obviously in the two years. This probably was in the works before the pandemic, but for all the great things that you're doing for eCommerce and direct to consumer entrepreneurs. What are the best ways to either get in touch with you or your team over there?

Asher Ismail: Yeah, absolutely. So you can always reach just at weareuncapped. com is our site. But I actually had a little special offer for the folks who are listening.

Ryan Cramer: Oh, Very nice.

Asher Ismail: If you run an eCommerce store and you are doing at least 10K per month, and you either want to scale your marketing campaigns faster or purchase inventory, obviously we would love to help. And in October, we ran this super successful campaign and funded hundreds of store owners. And we gave them basically up to 50K absolutely free. So there was no fee attached. Normally we charge 6%, but in October we did it for exactly zero. So on our website, you won't find mention of it anymore, it's gone. But we thought for listeners of Crossover, we would maybe make it happen again. So all you have to do is reach out to me at asher @ weareoncap. com with the subject line'secret 50K' and a bit about you to see if you qualify. And yeah, we'd be really excited to hear about your store and make it happen.

Ryan Cramer: Sorry about that. The dog in the background decided to wake up at the last second and I didn't have it muted on. No, that's a fantastic offer. And we'll make sure we put it in the comments and the show notes as well. We'll have to get that and make sure we blast it out to all of our social networks as well. So yeah, we'll make sure the directions offsite, we get all that and put it into the box and make sure everyone listening can take advantage of that. Of course, that's an amazing offer. I would definitely take advantage of that in that position. But thank you so much, Asher and team, for staying up late. I know in the UK it's Friday night and it's what, 6: 00PM, maybe 7: 00PM, close to it at night over there. So thank you for staying up late your time, earlier in our US time, and educating us on how you guys are changing the eCommerce world and investment world. And I can't wait to see how you guys grow and see the blossoming nature of what your business is taking off. So congratulations on the success and future growth

Asher Ismail: Hey, thanks so much, Ryan. It was really great to be here.

Ryan Cramer: Absolutely. Thank you so much, Asher. And thank you as well everyone else who is tuning in live with us on Facebook, LinkedIn, YouTube and Twitter. I'm Ryan Kramer, and this is Crossover Commerce. If you liked what you heard, go ahead and give us a thumbs up. Or if you are listening to our episode on your favorite podcast inaudible, whether it be on Amazon Music, Shopify, Apple Podcast, Google podcast, whatever you listen to your favorite shows, go ahead and give us a thumbs up and would be more than happy to take your feedback. If you liked what you heard, if you have some questions, to get in touch with our guest, Asher Ismail of Uncapped, just let us know. Tag us in the comment section and we'll make sure you get in touch and get advantage of that awesome, amazing promotion as well. But for everyone else, if you're listening to us live, have a great weekend, be safe out there. And of course, tune in next week. I know it's holidays for lots of people, but we're going live twice next week before the holiday season truly kicks off. We'll call it in quotations before the holiday season really kicks off and really takes advantage of the busyness of the holiday season. We'll be talking international marketplaces. We'll be talking about lots of different other things in the Amazon and eCommerce world. But make sure you subscribe your channels and follow us on social media. That's the best way to know when we go live and know when there's other Crossover Commerce episodes available. Go ahead and check out usa. pingpongx. com/ podcast for all of our past episodes. This one will also be there as well. I'm Ryan Cramer, and this is my corner of the internet called Crossover commerce. We'll see you guys next time. Take care.

DESCRIPTION

Ryan Cramer of Crossover Commerce talks with Asher Ismail of Uncapped one-on-one as they discuss lessons from investing $120M+ into 100's DTC Brands.

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Today's Host

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🎙 Ryan Cramer - Host

|Partnership & Influencer Marketing Manager

Today's Guests

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Asher Ismail

|Co-Founder of Uncapped