Sila Inc., a fintech software platform that provides banking-as-a-service, and Sivo, a leader in providing founder-friendly, programmatic debt funding – debt-as-a-service – to enable fintechs to lend to their users at scale, announced that they entered a partnership. Debt financing is an important funding source but often not as well understood as raising money from VCs in exchange for equity. Key elements of Sivo’s debt-as-a-service offering are getting a debt partner from pre-launch to $20 million in loan book, no upfront fees or complex agreements, no dilutive warrants, and debt lines lenders draw capital in days vs. weeks or months. These services are available to Sila customers as of today.
Debt and equity financing are often complementary and each has its advantages and disadvantages if you’re the owner of a company. Providing equity in exchange for money is what most startups do initially. Founders accept that they must share part ownership of their company to get access to capital. Debt on the other hand is a temporary arrangement and complete once the debt is paid back. Traditionally, there is equity dilution in the form of warrants, especially for startups. Debt financing also can offer a lower cost of capital to equity and allow greater cash efficiency to grow a business.
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“We are very happy to add Sivo to our list of strategic partners,” said Shamir Karkal, chief strategy officer and co-founder of Sila. “Access to debt financing fills an important gap in our ecosystem that by now encompasses more than 40 service providers. In the same way that Sila is laser-focused on ACH, those partners are best-of-breed service providers in their own right. The combination of those skills is a huge advantage for our customers.”
“The average debt deal takes roughly seven months to close and even longer in emerging markets, which is an existential timeline for startups,” said Kate Hiscox, co-founder and CEO of Sivo. “At Sivo, we’re allowing businesses to get access to debt capital in days, not months, so founders can grow their businesses. Traditional debt facilities generally won’t consider a debt deal below a loan book in the tens of millions of dollars. At smaller sizes, startups need fast, flexible funding to grow quickly and graduate to a world-class private credit fund or bank . Our service is already having a profound impact on startups in the fintech and marketplace sectors, and we’re excited to partner with more as we continue growing Sivo.”
Sivo’s debt-as-a-service offering is available globally, allowing businesses to access their debt line and disburse funds to their borrowers via APIs. Originators can configure their debt line to best align with their business goals or speak with seasoned credit and risk experts at Sivo to determine the best course of action. Sivo provides fast, fair and transparent standardized deal structures that grow with its customers, from startup to graduating to world-class partner funds.
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