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In recent days, Il Sole 24 Ore has relaunched the news of Casavo raising 27 million euros in debt. We thought it was important to explain a little better what this means and what impact this news will have on our activities.
In February 2019, we told you about our 7 million euro Series A financing round. In that case, it was a liquidity injection from investors to allow Casavo to grow. External support is necessary for the survival of all new companies that introduce innovative business models. Our investors, in exchange for a percentage of ownership, of the company, have contributed financially to the growth of our startup.
In this case, however, it is a "debt" collection. What is the difference?
A company works exactly like a family. Both entities have monthly expenses that they finance with income, which allows them to cover the expenses incurred. The difficulty, often, is not having enough money to cover these expenses, but having the necessary liquidity at the right time. In the case of a family, it may happen that you have to pay the bills at the beginning of the month, while you receive your salary at the end of the month. How do you make ends meet?
In Casavo's case, the situation is a little more complex. Every month, our company purchases dozens of properties throughout Italy, which require a large amount of capital. If we had to use only the cash we have in hand, we couldn't grow. We would limit ourselves to buying the houses only once one of the previously acquired homes had been sold. In short, we would be very slow, limited by the money in the bank and we could not offer an innovative service like that of the Instant Buyer.
Therefore, we have We decided to ask someone with significant financial resources to lend us the capital needed to buy the properties. This capital will be repaid once the purchased properties are resold. This is therefore a long-term loan of over 27 million euros.
Is 27 million euros of debt a lot?
Obviously, it's a lot, but it depends on the context. Every day, large companies raise debt capital through financial instruments, reaching sums of over half a billion euros. Even the well-known Spotify raised, a few years ago, one billion euros in debt. For a relatively small company like Casavo, the raising of 27 million euros is further evidence of the stability of our business and the trust that investors have in us.
What other element makes this debt raising even more significant?
For the first time, Casavo has raised 27 million euros in debt. We managed to involve one of the main Italian banks in this financing operation. Until now, our investors were mainly investment funds that work with innovative startups, financing them and betting on their success. These companies are therefore accustomed to taking greater risks, helping the growth of companies like Casavo. Italian banks, for various reasons, cannot afford to take this type of risk and only guarantee capital if they are truly convinced that the applicant can repay it. If you have taken out a mortgage with a bank, you know what we are talking about! Therefore, involving one of the main Italian banks in this operation confirms, once again, the solidity of Casavo and the opportunities it offers. of growth we face.
How will this 27 million be used?
Simple, to do what we were born to do: simplify the Italian real estate market. This capital raised allows us to continue growing, acquiring even more properties and continuing our geographical expansion. In the first 17 months of its existence, Casavo closed more than 100 acquisitions. In 2019 alone, 200 will be concluded, in the four Italian cities where we operate (Milan, Rome, Turin, and Florence). And our story certainly doesn't end here!
