At the height of the Covid pandemic countries around the world, and the businesses eager to sell to them, scrambled to get their hands on PPE and related healthcare products, which proved to be a universal pain point due to a massive demand-supply imbalance in the market. It was extremely difficult for both veterans and amateurs alike to source sufficient quantities of inventory at any given moment.
Fortunately BuyHive, a Hong Kong-based startup that launched a few months before the pandemic affected the globe, was offering a hassle-free sourcing solution focused on trust and transparency, consisting of a network of 5,000 freelance sourcing experts ready to help global buyers find and order from the best suppliers in key sourcing markets like China, Vietnam, and India. BuyHive’s solution is able to support the full range of buyer needs, from supplier identification and qualification to production of both standardized and customized products, and takes responsibility for product quality, compliance and on-time delivery.
With the support of Choco Up, BuyHive was able to double their gross monthly revenue.
Today, Choco Up shares the success of this partnership.
The immense success of BuyHive led to rapid unsustainable growth. With over 100,000 users engaging with their platform, and over 5,000 sourcing experts recruited for their freelancer network, BuyHive could not keep up with the growth in orders. Pandemic-inspired practices like 100% cash payment up front to suppliers made it very difficult for BuyHive and its buyer customers to find enough cash, which meant that BuyHive was unable to keep up with the volume of incoming orders.
“For hyper-growth businesses cash flow and receivables are often the hardest to manage – even more so in a pandemic market,” said Minesh Pore, the CEO of BuyHive.
To facilitate their rapid growth, the company needed to fix their cash crunch and accounts receivable delays. By doing so, they were able to instantly access their cash, and quickly make purchases to fulfill more buyer orders.
For a sourcing business such as BuyHive, cash is always being used to make purchases. Hence, it is difficult to raise sufficient capital to fund a steady volume of large orders.
A company in BuyHive’s position needs access to large amounts of cash to make large purchases, without jeopardizing cash flow required to manage other orders – both current and pending.
However, as a digitally native business that is asset-lite and only a few years old, it is difficult for BuyHive to secure favorable loans from banks and traditional financial institutions.
“Traditional financing methods do not favour new companies like BuyHive. We do not have a large asset base and credit history required for most bank loans,” said Pore.
Choco Up understands that accounts receivable delays are detrimental to business operations. The direct integration of sales and marketing channels allows Choco Up to underwrite the company and finance their receivables within days.
Choco Up provided BuyHive with a US$2.2 million funding facility, so that the company was able to fulfill large orders without diverting cash flow from other orders in the pipeline.
“With the help of Choco Up, we were able to accelerate our cash flow to support our rapid growth,” said Pore.
With over 5,000 BuyHive sourcing experts ready to handle sourcing projects from buyers worldwide, the need for trade financing will accelerate as the company grows. Choco Up will continue to assist BuyHive in managing its cash flow and financing BuyHive’s customers so that BuyHive can fulfill many more orders -- bigger in size and more quickly!
Choco Up and BuyHive’s partnership has made it possible to provide millions of dollars of critical goods needed to treat Covid patients and protect the public around the world, and both companies look forward to an even brighter future together.