Welcome to the FastPay News Center, featuring press coverage of FastPay and our clients, feature stories written by members of our team, and the latest Company news.
Three years ago, AdExchanger covered FastPay, a startup offering credit lines to digital media companies. Since then, FastPay has raised about $35 million in credit and equity itself, expanded its clientele, and is about to launch a new product.
FastPay steps in when an ad network owes money to a publisher but hasn't yet been paid by the advertiser. It fronts money that the network (or other intermediary) can use to pay the publisher while waiting on payments from the ad agency or other buyer. We caught up with FastPay founder Jed Simon for an update.
Building a business around online advertising is hard enough without having to combat the cashflow issues created by lengthy payment terms. A survey by industry regulatory body IAB indicates that nearly 80 percent of digital advertising invoices take 60 days or longer to pay. Yes it’s great that Pepsi and Ford want to advertise on your site, or purchase inventory through your ad exchange, but the fact that they want to pay you “net-90” – or after 90 days – could seriously hamper your growth.
FastPay, a technology-driven “anti-bank” in founder and CEO Jed Simon’s words, is helping combat these growth impediments by providing commercial loans against digital advertising receivables – aka factoring. Since launching in 2010, the company has lent out more than $100 million of this “working capital gap financing” to over 100 publishers, ad-tech companies, and other digital media businesses.
When it comes to funding an early-stage company, the options are often limited. They usually include angel and venture rounds. So it seems reasonable that there should be some more approaches, right? Well, this is what Jed Simon believes. Back in 2010, he started FastPay, which allows digital companies to finance their growth from receivables. Recently I met up with Jed to learn more about his business. Here’s what he had to say...
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Caught in a cash squeeze, emerging media companies are borrowing against their receivables to gain working capital.
At first, Paras Maniar [founding executive, former chief strategy officer and board member of EQAL] was cautious about FastPay. “It sounded like a fantasy,” he says. So last year Maniar did a test with one $200,000 invoice. “The cash came right in within 24 hours. When they got payment, they took their piece, and put the rest in our account,” he recalls. Maniar believes that EQAL’s acquisition by Everyday Health was a success for EQAL in part because it felt it could walk away if the deal wasn’t right. “If you can’t walk away, you get squeezed,” he says.
Los Angeles’s rise as an incubator for media-driven technology startups is well-documented, but it’s also becoming a hotbed for innovation in an unexpected vertical: financial services. With the recent advent of FastPay, a loan company catering to the digital ecosystem, smaller digital players can function more effectively with improved liquidity. Launched in 2010, FastPay grants credit lines (ranging from $100 thousand to $10 million) to lower- and-middle market digital publishers, which accelerate payments and allow firms to do more business.
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Back in June, I wrote about a startup called FastPay, which offers credit lines to digital media companies. At the time, CEO and founder Jed Simon pitched the service as an
alternative to venture capital. Well, a couple of months later I asked: Are there really companies that used FastPay instead of raising venture funding?
In response, the FastPay team put me in touch with two customers — Moguldom Media Group and Giant Media.
Both Moguldom and Giant have had ongoing relationships with FastPay for the past couple of years. Both companies say they’re profitable, but [Giant Media CEO David] Segura told me that as his company grows, FastPay’s value only increases.
“If you’re growing and things are awesome, the media problem at hand is actually getting worse from the cash flow standpoint,” he said, adding that Fast Pay is doing “in a lot of ways what the banks should be doing.”
As an entrepreneur, your daily schedule is likely jam-packed with meetings, phone calls and other tasks necessary to keep your business on track. Maximizing productivity is a must, but working straight through your lunch break and
eating a chocolate bar “al desko” may not be the answer. Whether it’s critical team building over organic fare, a heart-pumping workout or just some quiet time alone, a mid-day break
can refuel and refocus you and your team. We consulted 10 hip, young entrepreneurs from around the country about their lunch hour ritual and how it helps them rev up for the rest of the day.
[Click on Read More to find out how FastPay CEO Jed Simon combines lunch, learning, a rooftop view of the Hollywood sign and a weekly swim into productivity and leadership.]
FastPay gives ad agencies loans while they're waiting for brands to pay them for executing expensive campaigns.
Concept: Once an ad agency secures a contract from a big name brand, it can take up to 60 days to pay the agency after
a campaign is created and executed. Some of the upfront costs can be in the millions, and agencies get stuck with them for an
uncomfortably long time. Instead of raising a round or looking towards a bank for help, agencies can secure a line of credit through FastPay.
FastPay, a startup offering credit lines to digital media companies, says it has raised $25 million in new funding. That may sound like a weirdly specific business model, but founder and CEO Jed Simon tells me via email that FastPay is solving a big problem in the online advertising industry — the fact that it can take forever to get paid. According to a survey conducted by the Internet Advertising Bureau, it takes 60 days or more to get paid on 80 percent of invoices. So for example, if you’re a video syndication startup and you win a $2 million ad contract, the advertiser won’t pay you for months, and in the meantime you have to front the money for the campaign. In this situation, the best course of action may be to raise a sizable venture round, but that probably means selling a lot of the company.
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What FastPay does is interesting: It provides cashflow for online startups that rely on advertising money from big brands, most of which have very long payment cycles.
When you’re a lean, mean, hungry startup waiting a few months to get your first big check from Nike or Procter & Gamble, having funds when you need them is key — especially if you’re bootstrapped. Since most brands take around two months to pay their online advertising invoices, FastPay steps in with credit lines up to $5 million for a range of online businesses, including web-based publishers, digital creative studios, and ad-tech businesses.
David Segura’s online marketing company was on life support less than a year after launching.When Bank of America rejected his request for a $250,000 loan, Segura had to search desperately for a way to pay his vendors while working on viral video campaigns for Sears. In 2010, Segura stumbled upon a Beverly Hills company that was willing to advance $24,000 to Giant Media Inc. while holding $30,000 of his invoices as collateral. Within 48 hours, the money was in Segura’s account and Giant Media was able to pay its video producers. The company that gave him the money is FastPay.
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For media companies like web-based publications, financing can often be hard to come by. They’re often ignored by traditional financial organizations, and revenue generating strategies like advertising require lots of scale before they can become lucrative. Ask anyone trying to run a for-profit blog, even those that have steady income from subscription revenue: making money from media-based endeavors isn’t always the most straightforward process.
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"FastPay has been a lifesaver for us, literally. We feel very fortunate to have a partner that understands our business and is willing to underwrite and accelerate our growth." said David Segura, CEO and founder of Giant Media. "Our entire business revolves around executing campaigns on behalf of big brands which have extended payment cycles. FastPay has enabled us to take on more business and grow our team without worrying about cash flow, giving us the freedom and flexibility to focus on top line growth."
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Los Angeles-based FastPay, which provides an accounts receivable platform for digital media businesses, has raised an additional $25 million in funding.
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Destructoid is a popular and growing San Francisco-based gaming blog owned by content publisher ModernMethod. The company was founded in 2006 by Yanier Gonzalez, who is also the current CEO.
Despite the site's success, Destructoid needed to find a way to get revenue and get it fast, since it normally takes advertisers -- its primary source of income -- weeks to pay bills. Gonzalez had no luck when he turned to the banks.
Without FastPay, Gonzalez doesn't think his business would be thriving the way it is today. "I might've had to sell a kidney; it definitely would not be as awesome as it is today for sure," says Gonzalez. "I sleep better knowing that these guys are in my corner."
The CEO of FastPay looks at the evolution of the Internet and concludes the age of “one size fits all” is over. “Canned information just can't cut it anymore,” writes Jed Simon...
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Just because a company is profitable, doesn’t mean a company is generating enough cash," FastPay CEO Jed Simon says. "Even when companies are profitable and growing, they actually require even more cash. Online content publishers are a perfect example of how FastPay’s innovative approach to cash flow can help a young and growing company...
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The thesis at FastPay is that commercial banks don’t understand the Internet and are therefore reluctant to provide credit to the sector. Jamarlin Martin, founder and CEO of Moguldum Media Group, said his African American-focused blog network didn’t need a lot of capital to grow, but the long pay cycles made it difficult to invest in new initiatives. He said FastPay has been a great help. “It’s a nice alternative to have,” Martin said. “Entrepreneurs don’t have to take on the risk of giving up equity just to grow.”
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As the online sectors continues to mature, there are more ways to finance your business and increase your growth without sacrificing a large amount of equity. By financing several fast-growing websites, my company has gained a perspective on how the landscape is changing. Here are a few lessons we’ve learned along the way...
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Beverly Hills startup FastPay is on the fast track to growth as it continues to sign up Internet publishing and advertising startups looking for liquidity. FastPay has software that advances up to 80 percent of payments due to online publishing and ad services companies immediately, instead of those companies waiting months for their receivables, often the case in advertising and publishing.
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FastPay has developed its platform and systems to allow digital media companies to compete and grow. Offering credit lines from $100,000 to $3 million and more, FastPay says qualifting companies can receive capital in as little as one business day. managing their cash flow and most importantly, boosting revenue.
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This interview discusses the history of FastPay, the challenges and rewards of creating a new business model, and offers advice on how to overcome challenges while growing your business.
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Q & A with FastPay founder and CEO Jed Simon on the idea behind FastPay, what problems it solves for growing digital media companies, and the short and long-term benefits of using FastPay to provide working capital without the loss of equity and control.
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There’s a lot of money in social gaming — this common knowledge that has followed the success of Zynga, Playdom as well as many other young but profitable startups. But despite claiming huge cash flows, each of these companies also ends up trading partial ownership to investors for funding. If they’re so profitable, why not go without financing?
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