The Hive Project, which intends to build the world’s first cryptocurrency-based invoice financing platform, has raised 2,087 BTC, or over US$8.9 million, from 2,234 investors through its initial coin offering (ICO).
Invoice finance is a funding solution that releases the cash “locked up” in unpaid invoices to improve cash flow and increase the working capital available to the business.
Using invoice finance, the business “sells” its outstanding invoices at a small discount to a financier. The business immediately receives up to 85% of the value of the invoice instead of having to wait the usual 30 to 90 days to get paid by customers.
Many companies, and especially small businesses, rely on invoice finance to alleviate cash constraints.
The Hive Project aims to transform the current invoice finance landscape by providing small and medium-sized enterprises (SMEs) with easy access to short-term financing by turning their accounts receivables into tradable assets.
“For too long, SMEs have been left out in the cold by traditional lending systems which favor large companies,” said Jure Soklic, co-founder and CEO. “The success of our token sale is testament to market recognition of the need to reshape the invoice finance industry and ease the burdens faced by SMEs worldwide by bridging the liquidity gap, while providing attractive investment opportunities for invoice buyers.”
Hive uses the Ethereum blockchain and smart contracts to assign a unique fingerprint to every invoice issued. These invoices are then tokenized and published on a blockchain, and made available as a shared source of liquidity for factoring and invoice financing.
“With blockchain technology, every invoice is unique and can be assessed by a credit scoring algorithm, providing automatization and transparency to the whole invoice financing process,” said Soklic.
The Hive token (HVN) grants a holder the right to claim right over invoices on the Hive platform and obtain credit scores for certain entities which have a sufficient financial track record on the Hive blockchain.
Access to detailed financial data about a specific company or invoice can be granted only by the company itself or the recipient of the invoice.
“We want to help small businesses solve their liquidity issues by leveraging blockchain technology to provide financing options previously only available to large companies,” said Soklic. He added that the solution has the potential to “dramatically streamline invoice issuance and settlement processes, optimizing small and medium-enterprises’ ability to access liquidity for day-to-day operations and to finance expansion.”
The Hive Project’s end state will include a full marketplace with advanced trading analytics for peer-to-peer lending. The platform is expected to start operating by the end of the year.