Start-up failure. Common and explainable in most cases. According to CB Insights, over 40% of start-ups fail because of no market need and almost 30% fail because of lack of capital.
In the context of iCare Benefits, lack of capital is always a major concern as we are a company that frontloads all of our financing and have to bridge, on average, a five month cash gap. These five months come from the time lag between when we pay our suppliers versus when we recoup de money from our customers under our 6-month 0% financing program. This puts us obviously under constant financing strain. And if the right financing at the right rate is not secured on time, the entire iCare Benefits operation is doomed.
In the context of Cambodia for example, financing is even harder to find due to the lack of sophistication of the banking sector: most banks will only accept fixed assets as collateral and will not even consider intangibles (ie account receivables). And for a lean company like us, that operates a just-in-time model with no land, inventory or fixed assets, this is a major problem for our sustainability. We require some financial creativity in order to find the right source of funds that can ensure we survive as a social enterprise. These might be impact funds, MF financiers or family offices in hubs like Singapore or Hong Kong that have interest in a company like ours.
But if this financing is not found, the entire iCare model collapses relatively quickly and we have to ensure that we find creative ways to support our operation in order to continue serving our customers and their families.