Founded in 2019, Stories transforms real estate into co-working spaces tailored to the needs of therapists and coaches. Besides its co-working spaces, the Dutch company provides a platform supporting its customers with client acquisition and managing administrative tasks.
Secure debt to accelerate growth
Stories is a professional service provider. The Dutch-based company rents real estate and takes care of all the necessary renovations and interior design to build a safe environment for therapeutic practices. Currently, the company provides five locations in and around Amsterdam.
Now, Stories is about to take the next growth level. "We want to rapidly open new premises, continuously improve our service offerings and build a digital platform that helps our members with client acquisition and streamlining administrative tasks," says Alexander Sporre, CEO and Co-Founder of Stories.
To achieve this goal, Stories needs capital. "Equity isn’t always the right funding fit for all investments we need to make. We have a clear return on investment and predictable revenue streams," says Alexander.
Why traditional debt isn’t an option for Stories
That’s why the company started looking into traditional debt funding from banks. But it's a bumpy road. They clash with the criteria of a traditional bank. "Most Dutch banks demand positive EBITDA for at least two years," says Alex. "This approach is impractical for a startup like us."
Currently, the Dutch company isn’t aiming for profitability. "By renting our locations, we always aim to make profits within the first six months of opening on a locational level. But, as we grow, including all operational costs we still would end the year with a negative EBITDA. If we would stop all our investments, we would perhaps be profitable within the next two years on a company level. We see increasing demand, so we want to invest. Therefore, getting debt from banks is impossible for us in the current situation," states Alex.
How to pre-finance expenses with debt financing?
Thus, a bank loan was off the table. Stories needs an instrument to pre-finance operational and capital expenses. That’s why they were looking for an alternative financing instrument.
Mainly, this alternative should fulfill three things:
- It should provide debt capital for further growth.
- It needs to understand the specific characteristics of its business model and predictable revenue streams.
- It should be adaptable to new circumstances and growth opportunities.
Recognizing its needs, they turned to re:cap and its flexible debt funding product.
Empowering growth with tailored debt financing
"re:cap matches all of our requirements," says Alex. Stories can pre-finance its operational expenses when renting new locations. Due to its adaptability re:cap’s funding solution matches the capital needs of the Dutch company when renovating new real estate.
"re:cap’s debt funding product is crucial to our growth strategy. We can tailor our funding as investment amounts for the renovation can vary."
Enable long-term growth
For Stories these circumstances have a direct impact on their funding strategy. This flexibility allowed the Amsterdam-based company to navigate the challenges of high upfront costs when renovating co-working spaces.
As soon as the co-working spaces are rented, Stories can repay its debt by using parts of the rental income. "That’s ideal for us. Due to the long-term rent contracts, the first 6 to 10 months are rent-free," explains Alex. This has another positive impact: the rent-free period additionally relieves the cash flow.
With this fitting use case, Stories wants to further grow with re:cap. Alex explains: "We’ve found the perfect fit to pre-finance expenses that help us to accelerate growth in the long-term. We see the increasing demand from therapists and coaches lacking access to suitable workplaces." Now, Stories can not only fulfill this demand but has the right debt funding solution for it as well.
