Eskuta Case Study
Access to flexible debt finance enables Eskuta to capitalise of market opportunities and grow its customer base
Across Europe, US and Middle East
UK Restaurant Partners
Eskuta designs and manufactures a range of proprietary electric vehicles for the B2B and leisure markets. Established in 2015, the business primarily focuses on the growing demand for electric bikes and scooters, particularly in the ‘last-mile’ delivery market.
Eskuta’s solution is capitalising on two marked shifts in consumer behaviour – the move towards a more sustainable alternative to combustion engine vehicles, and the rise of delivery apps which have transformed the way we order food. This has resulted in Eskuta’s electric delivery bikes and scooters being in high demand, including from the likes of Just Eat, but the business needed to secure additional finance to help it fulfil these new contracts. Too early-stage for large-scale institutional backing, Eskuta approached Maven for a loan from the MEIF Maven Debt Finance fund. The debt package which was provided, helped the business scale up and go on to win contracts with other delivery companies and fast food chains such as Papa Johns and Subway.
Overcoming the financial challenge of fulfilling new orders
Eskuta had already established a key partner contract with Just Eat for the supply of e-cargo bikes to their 28,000+ UK Restaurant Partners, as well as being the ‘Official e-bike Supplier’ to Dominos and Pizza Hut. Despite Eskuta’s success at bringing on board blue-chip clients, the business still required additional working capital to capitalise on the new developing opportunities which were driven by positive market dynamics.
For many early-stage businesses, access to finance has long been an issue and overcoming this hurdle is often the greatest limiter to a business fulfilling its growth potential. “Invariably with most start-up businesses’ they have created an innovative product or service with a good opportunity for market traction, but this can’t be exploited to its full potential if funding is not available to invest in infrastructure or even just stock to facilitate orders,” explains Ian O’Connor Managing Director at Eskuta. “When you look in the market for funding the landscape is usually dominated by high-street lenders or finance brokers. If you're a relatively new business, both are challenging, especially if you do not have assets available as security.”
The Midlands Engine Investment Fund, supported by the European Regional Development Fund, was set up to transform the finance landscape for smaller businesses in the Midlands. Maven, which manages the debt finance element of the fund, set out to make it easier for companies with growth potential, like Eskuta, to get the capital they require to build a strong and more sustainable business.
“It reminded me of the ‘old school’ way when trying to secure a loan with your local business bank. If the business plan is good enough and there is faith in you as an individual, this was the main criteria. It wasn’t based on assumptions,” says Ian. “Maven came out to see us, looked at the operation, met with staff, understood the product and generally bought into the project. That meant a lot, it felt more of a partnership than just someone we wanted to get a loan from.”
Eskuta sees Maven as the right partner to help support its growth
When high street lenders are not a viable option there are a growing range of debt solutions available for start-ups and small businesses. Maven was able provide an initial £250,000 of funding to the business, via MEIF Maven Debt Finance, to allow the company to purchase additional stock in order to meet the growing demand for its a range of electric bikes and scooters.
“The funding allowed us to forward order from our Chinese factory. We did not have a credit facility, and until that point the business was using its own cash to fund purchases,” explains Ian. “Whilst this worked for a while, as the business grew and more stock was required, we did not have the level of cash to support this. Maven helped us to bridge this gap, enabling the business to drive forward with more sales knowing that we could now deliver on those contracts in a timely manner."
"Moreover, as the business continued to improve, we were able to receive an additional allocation of £750,000 from Maven and we are now well positioned to capture future growth opportunities," confirms Ian.
Funding enables Eskuta to kick on
The capital injection helped solve what was a continual problem for the business and had been hindering any prospect of Eskuta expanding and fulfilling its true potential. “We had the opportunity to achieve more sales from current and new B2B clients, but we were unable to confidently fulfil those orders without addressing our working capital requirements. Maven helped us bridge that stock funding gap. The new funding has allowed us to grow the business exponentially and enter new markets via a UK distributor which has positioned Eskuta in retailers such as Harrods and Selfridge's.”
Ian and his senior management team have taken the business from a pre-revenue status to securing contracts with some of the biggest names in fast food and home delivery, such as Just Eat, and since it has received the funding the business has quadrupled their turnover. The issue around a backlog of orders, which previously held back the business, has been rectified and Eskuta is well positioned to continue its growth in the burgeoning electric vehicle sector, specifically with regards to last mile delivery services in urban areas. “Maven has helped solidify our position as the market leader in eCargo bikes in the UK,” says Ian. “Electrification and micro-mobility is a market sector that is due to grow exponentially in the coming years and Maven saw this potential. Their funding has played a vital part in allowing the business to prosper.”
Demetri Theofanou, Investment Manager for Maven and who led the transaction, summarises how debt finance addressed Eskuta's immediate business needs: “Since the initial funding the business has grown well and we were able to continue to support the business with an additional capital injection as they looked to partner with leading distributors across Europe, the US and the Middle East. Recent trading has been very encouraging and Eskuta is in conversation with a well-known established food delivery company for them to adopt Eskuta’s eCargo transport solution."