Venture Leasing – How to Get Financing For Custom-Made Equipment

August 17, 2016

Tiffany Charles, CFO of Medtech Solutions, was adverse a difficult challenge. Medtech, a venture-backed startup in business for two years, bare analysis accessories analytical to its operations. While analysis accessories is broadly accessible for a lot of analysis applications, the tests to be conducted at Medtech appropriate custom-built accessories offered by alone one US manufacturer. Medtech had aloft acceptable adventure basic to armamentarium a lot of of its analysis and development projects, but the custom-built equipment’s bulk would crave an unacceptably ample allotment of Medtech’s analysis budget, attached investments in added key areas. Tiffany explored architect costs and contacted several leasing firms, but to no avail. How would Tiffany access the accessories that Medtech bare after application centralized funds analytical for added projects?

Why custom-equipment costs is so difficult to obtain

Potential costs sources access requests for this blazon costs cautiously. A lot of costs for venture-backed startups involves a top bulk of accident in allegory to costs acclimatized companies. Costs sources that extend acclaim to venture-backed startups are acclimatized to accepting startup risks. These risks cover costs companies that are almost new to their markets, that accept abrogating banknote flow, and that await on adventure basic advocacy to break afloat. Notwithstanding these risks, a lot of costs sources are afraid to yield on the added accident of costs accessories that they may be appropriate to re-market one day, but are clumsy to move. Many of them apperceive that a baby allotment of the affairs they accede will not plan out, acute them to reclaim and re-marketing the accessories to balance as abundant of their investment as possible. Custom-equipment presents a huge claiming in that it offers around no backstop should all added avenue channels fail.

Whether or not a venture-backed startup can access costs for custom-equipment ability depend on several factors:

  • The dollar bulk and allotment that the accessories represents of the absolute to be financed
  • Whether added assets can be offered as accessory to defended the transaction
  • The startup’s all-embracing acclaim profile
  • Whether administration can argue the costs aggregation that the accessories is analytical to operations and/or profitability
  • Whether an aftermarket exists and whether there is any anticipation of acumen amount from the accessories if re-marketing is necessary
  • Whether the bell-ringer offers accessories buy-back, trade-in, or re-marketing support, if desired.

How do adeptness startups affected this costs challenge?

To advance the allowance of accepting financing, startups should yield the afterward steps:

  • Stick with costs firms that specialize in costs venture-backed startups. These companies accept adventure risks and are in a bigger position to appraise affairs involving custom-equipment.
  • Research the after-market for the accessories by talking to the bell-ringer and searching for acclimated accessories brokers/dealers online. Often, the bell-ringer can accommodate resale advice and acclimated accessories resellers can be spotted online via advertisements and postings. Make abiding you accommodate your re-marketing analysis to the costs firm.
  • Explore re-marketing abetment with the vendor, including accessories buy-backs, trade-ins, or added bell-ringer re-marketing arrangements. Depending on the vendor, barter may be able to antechamber for appropriate re-marketing arrange as a acquirement incentive.
  • Consider added assets that the startup ability agreement to abutment the transaction. The capital affair of the costs antecedent is getting able to avenue the transaction should the startup absence in authoritative payments. By alms added accessory to abutment the transaction, the startup may be able to allay or abundantly abate this concern.
  • Try to agenda custom-equipment purchases forth with added accessories that has an acclimatized aftermarket, such that the custom-equipment represents a boyhood of the accessories getting acquired. Similar to alms added accessories as collateral, by bundling custom-equipment with readily re-marketable equipment, the all-embracing accessory amount of the array ability be acceptable to calm the costs provider’s concerns.
  • Highlight the analytical attributes of the equipment. If it is analytical to the startup’s advantage or operations and accident of the equipment’s use would put the startup in a decidedly weaker position, the anticipation of accepting costs is somewhat improved. The account is that the costs antecedent will accept a about advantage vis-à-vis added creditors in any aggregation accord because the accessories ability be bare to restructure the aggregation or to abetment added creditors in their recovery. While this is not a primary acumen for costs custom-built equipment, it is a agency advised by a lot of costs sources in authoritative a final decision.

If your startup needs costs for custom-built equipment, use these tips and insights to cross your search.