How the founders of MagicHolz leveraged their corporate experience in eCommerce to scale a thriving business.
Industry
Food, Grocery and Entertainment
Location
Germany
Company site
https://magicholz.de/

You’ve heard this story time and time again. Seasoned corporate veterans taking the plunge into building their own business. Every entrepreneurial journey is different but the common attribute is the founder’s drive to forge their own path. This was very much the case for the co-founders of MagicHolz - Lars and Chris. 

Having spent their careers working in corporate jobs, the desire to bring a lot of those skills to their own business made them take the plunge in 2020. With just a few hundred euros, a tiny office space and the idea of selling 3D puzzles, MagicHolz was born.  

Funding Growth 

From the getgo, Magicholz surpassed Lars and Chris’s expectations and began rapidly growing through the first few months of business. In 2021, Magicholz grew 9x since its initial year of operations. 

But once they started scaling, one of the biggest roadblocks  Lars and Chris faced was the working capital issue that troubles almost every growing eCommerce brand. Growth and the ability to find scaleable acquisition channels were not the issues. The ability to strike when the iron was hot and to invest in the business when Magicholz was experiencing hockey-stick growth was apparent. 

Unchartered Territory 

Initially, Magicholz looked internally for things they could optimize and improve to help aid cash flow management and margins. The first thing they did was negotiate better payment terms with their suppliers. This freed a good amount of cash flow and is a great tactic for any eCommerce brand looking to increase its margins.

But saving a couple of percent on supplier costs will rarely free up enough cash to buy additional inventory and ramp up marketing campaigns in order to chase after aggressive growth targets. So when it came to finding ways to fund their growth MagicHolz looked at a few different options. 

Initially, the duo went down the traditional bank loan route, but the personal liability and amounts accessible through this route didn't match MagicHolz’s growth targets. When they tried to source a business loan, they were also met with antiquated processes and a lack of understanding of how an eCommerce business works.

“A huge problem with getting a loan from a traditional bank is the process. We found that they don’t understand eCommerce businesses and we were basically told ‘you can try, but you probably won't get approval.’ So, we had to look at alternatives,” explains Lars.

After speaking with one of their partners, they were recommended to look into revenue-based financing, which eventually led them to Wayflyer. 

Having no knowledge of revenue-based finance Lars and Chris quickly began to understand the flexibility this style of finance offered and how it was a perfect fit for an eCommerce brand like theirs. Immediately they could see how this could be the key to helping unlock additional growth.  

The Future: Growth, Growth and more Growth  

Lars views Wayflyer funding as a pivotal part of Magicholz’s growth strategy. Magicholz is a business that moves fast and they wanted a finance provider that matched their pace and their ambition.  

MagicHolz is deploying the capital they received from Wayflyer to purchase inventory and scale performance marketing campaigns, relieving the stress these two investments usually put on its cash flow. Now, Lars and Chris have more time, energy, and cash, to ensure MagicHolz fulfils its full potential.

“With our own cash flow we simply cannot achieve the revenue targets we have in place for 2022,” explains Lars.
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