Danish Fashion Going Global - Spandet And Partners

DANISH FASHION GOING GLOBAL 58
18.2. Factoring
As an alternative more and more fashion companies work with receivables finance
(“factoring”), helping them make more efficient use of their working capital or as an
alternative to overdraft financing with the bank.
Instant cash (up to 90% but often less) is advanced against unpaid and issued
invoices to boost the cash flow.
Credit insurance is often an extra product on top for most fashion companies;
however, it has become increasingly difficult to get receivables credit insured.
18.3. Vækstfonden
Vækstfonden is a state investment fund, which aims to create new growth companies
by providing venture capital and competence. Since 1992, in cooperation with private
investors, Vækstfonden has cofinanced growth in more than 4,200 Danish
companies with a total commitment of more than DKK 8.1 billion. Vækstfonden
invests equity or provides loans and guarantees in collaboration with private partners
and Danish financial institutions. The companies which Vækstfonden has cofinanced
since 2001 represent a total revenue of more than DKK 25 billion and employ
approximately 27,000 people all over the country.
Vækstfonden was involved in both Ann Hagen (which went bankrupt in 2008) and
Noir (which has now been sold to a private investor at significant losses).
Consequently, it is doubtful when we will see involvement from Vækstfonden in the
fashion business again.
18.4. Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high-growth
start-up companies.
The venture capital fund makes money by owning equity in the companies it invests
in, which usually have a novel technology or business model in high-technology
industries, such as biotechnology, IT, software, etc.
In addition to angel investing and other seed funding options, venture capital is
attractive for new companies with limited operating history that are too small to raise
capital in the public markets and have not reached the point where they are able to
secure a bank loan or complete a debt offering. In exchange for the high risk that
venture capitalists assume by investing in smaller and less mature companies,
venture capitalists usually get significant control over company decisions, in addition
to a significant portion of the company’s ownership (and consequently value).