•  Inventory Consignment

Kickfurther - Inventory consignment marketplace

Kickfurther is a novel marketplace where brands who sell physical products can find backers to finance inventory, which is sold on consignment. The repayment period can be relatively short (often a few months) with attractive returns, but prospective investors should be sure to understand they are purchasing physical product inventory, not an investment security.

Kickfurther

  • Founded: 2014
  • Investment Types: Inventory Consignment
  • Sectors: Consumer Packaged Goods, Clothing, and Cannabis
  • Advertised Returns: 5-15%
  • Open to all investors
 Pros
  • Open to non-accredited investors
  • Low minimums
  • Novel "no-confidence" voting model to cancel underperforming projects
 Cons
  • Complexities of inventory and logistics involved represent a learning curve
  • Offerings sell out very quickly (often within minutes)
  • For most offerings, funds must already be deposited in a Kickfurther account to participate

Overview

This Kickfurther Review will help you learn more about Kickfurther's investment offerings, including how the alternative investments on Kickfurther are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.

Kickfurther was founded in 2014 in Boulder, Colorado, by an entrepreneur who was frustrated with available options for financing physical inventory, and inspired by the Kickstarter crowdfunding model. The Kickfurther model allows brands to manage the “float” between when payments are due to suppliers and revenue is earned from customers.

Companies financing inventory on Kickfurther must have at least $150K in sales, and can finance up to $2M in inventory purchases.

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Types of investments Kickfurther offers

Investors on Kickfurther are purchasing physical inventory, which is then sold on consignment by the brand raising capital and repaid along with a profit margin for the backers.

Most of the brands raising are consumer brands (for example: makeup, snacks, clothing, bicycles). Investments are called “Consignment Opportunities” or “Co-ops” for short.

What do you get when investing with Kickfurther?

When funding a Co-op, buyers are purchasing physical inventory, so there are no investment “securities” involved. Typically the inventory being purchased is divided up into units (“packages”) so buyers are purchasing a specific number of inventory packages, which are then sold on consignment by the brand.

How does Kickfurther make money?

Kickfurther itself doesn’t charge investors any fees, but does charge brands financing inventory a percentage of the amount raised.

Potential returns and cashflow

Buyers are paid on a “first out” basis as product packs are sold, and receive a pre-determined percentage profit on each pack sold (typically between 5-15%). Prospective investors should note that those return percentages are not annualized, so depending on the terms of the specific co-op, may represent a substantial upside potential.

As an example, it may cost $20 to manufacture an item, and buyers are paid $22 when the item is sold 3 months later, representing a 10% profit margin, which is approximately 40% when annualized.

The numbers vary a bit in different places on the Kickfurther website, but they report between 92-99.5% of Co-ops are successful.

Breadth of offerings on Kickfurther

As of this writing there is one open Co-op, and another upcoming. Kickfurther regularly releases new co-ops, and they often sell out quite quickly (sometimes within minutes or hours).

Kickfurther provides detailed information about the number of prior Co-ops a brand has run, how long they’ve been in business, the brand’s annual revenue, and more. Prospective backers can also see whether the brand itself will hold the inventory, or if it will be held with a “3PL” (3rd-party logistics provider).

If there is an issue with a Co-op, Kickfurther has several mechanisms in place to protect backers: if a co-op enters “troubled” status, then if more than 50% of the backers vote “no confidence” the co-op may be canceled (recourse options vary by co-op – some include personal guarantees and/or UCC liens). There is a detailed breakdown on the cancellation process at the Kickfurther website

In rare circumstances, Kickfurther itself may cancel a Co-op as well:

If the Co-Op is canceled by Kickfurther, it typically happens prior to funding. If our sales team is able to determine that a co-op will not fund, the co-op is marked “Canceled - Would not fund” and all contributions are refunded to the buyers. Kickfurther very rarely cancels a co-op after community funding has been achieved. However if elements of fraud are detected, a critical supplier issue emerges, the final co-op details aren’t successfully completed by the business or there is another extenuating circumstance, Kickfurther reserves the right to cancel the co-op and refund the buyers for their contributions.

Regulatory framework and due diligence expectations

Because Kickfurther offerings do not involve any investment “security” they are not governed by any SEC regulations (which also means they open to any investor).

Kickfurther individually reviews all businesses raising funds on their marketplace, including an up-front vetting process, as well as various “badges” to help backers assess co-ops (for example, indicating whether the business owner has provided a personal guarantee, and whether Kickfurther has direct access to the brand’s inventory reporting):

All companies looking to raise money on Kickfurther need to pass our vetting process, which includes, but is not limited to: sales history reporting including revenue documentation, a business credit report, verifying the business’s legal name and standing with the Secretary of State in the state the business is located, searching the internet for negative or criminal news associated with the business, and reviewing any pertinent purchase orders or any other information listed in the Credibility Metrics on their Co-Op


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