Standing out in the factoring space can be difficult. It’s a fairly simple process to pay drivers a day or two after submitting an invoice, or maybe even the same day.
BasicBlock now has $78 million in new capital that will help bring the interest rate on its factoring loans to zero.
BasicBlock announced Monday that it has secured a $78 million financing package consisting of both debt and equity. Although the funding is only now being disclosed, according to co-founder and CEO Taylor Monks, it has been in place since mid-November.
In an interview with FreightWaves, Monks declined to disclose the debt/equity split in the package, but said it was “definitely aggressive on debt this round.”
He also declined to provide an estimate of BasicBlock’s valuation after the new capital injection.
“Why we went out and grabbed this aggressive lap doesn’t matter at all,” said Monks. “I’ve seen a world where factorization will be zero percent in a few years.”
Monks described the push towards zero percentage as something that is BasicBlock’s “vision” for the next 18 to 20 months. “Not only do we want to factor same day, we want to do it for free,” said Monks.
He conceded that such a plan “sounds crazy. … Trust me, I look in the mirror some mornings and I think this is absolutely insane.”
At the heart of what BasicBlock does is Monk’s belief that “we can make so much more money with other products in finance.”
He added: “We don’t make money from truck drivers. We can make money with banks.”
Monks sees a market in which an ecosystem of banks, insurance companies and other service providers are trying to profit from the trucking market with a wide range of products. Monks said he sees BasicBlock as a channel through which these services can be delivered to the truck customer. “BasicBlock’s future lies in more underwriting and loan extension, with factoring being a key element in the data element,” he said.
BasicBlock currently charges a flat rate of about 2% per factoring transaction, Monks said, but he added that the company has “slowly ramped it down” in recent months “as we’ve built out other products and other partnerships. ”
The company has financial ties with several institutions, Monks said, but he disclosed only one, Nelnet, which is on the list of lenders in the latest round of funding.
BasicBlock now offers many of the same services that other factoring companies can offer, such as: B. a fuel card. But with the new funding and the connection with Nelnet — which happens to be based in Lincoln, Nebraska, home of BasicBlock — Monks said additional services can be extended to truck customers. Recently, a banking service “specifically geared towards smaller owners and operators” was launched through BasicBlock.
Part of BasicBlock’s vision is to take the data from its factoring relationships and make it available to the companies that provide other finance-based products to the trucking industry. That data can be real-time, Monks said, in contrast to data financial institutions now use, which he says is often “outdated.”
“We can provide forward-looking data,” Monks said. “We can tell them how much they drive, we can tell them what they transport and for whom. This allows the banks to say, ‘Okay, this loan is safer than we thought.’”
Monks said that BasicBlock’s driver base is growing 25% month-on-month “with extreme consistency” and that the funding round “really unlocked growth capital that the company has been holding back.”
Pushing for the seemingly staggering growth numbers, Monks said the 25% came with a seller, “and that’s not crap at all.”
Monks said another key part of BasicBlock’s value proposition is its lack of contracts. Drivers using its factoring services are not tied to BasicBlock.
“The fact that we don’t have contracts is a testament to how poorly they have been treated by established factoring companies in the industry,” Monks said, noting that BasicBlock offered its services to get drivers out of existing contracts , “That alone has enabled us to truly earn the trust of these carriers.”
In addition to Nelnet, participants in the fundraising round included Autotech Ventures, Clear Haven Capital Management, Emergent Ventures, as well as ongoing investments from Revolution’s Rise of the Rest Seed Fund, SaaS Ventures and TNT Ventures.
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