BioTools
Getting the right tools to the trade
For 17 years, BioTools has been innovating and producing many of the scientific instruments critical to both pharmaceutical and university bio-research. After the business moved to Jupiter, Florida—an emerging biotech centre that has also attracted research institutes such as Scripps and the Max Planck Institute for Neuroscience—some of BioTools’ angel investor funding dried up, just as the company was introducing two new products. Despite having orders for equipment, they wouldn’t be able to produce it without an alternative source of financing.
Their first step was to bring on a CFO from the CFO Center, an organization that helps small- to medium-sized companies outsource CFOs with large corporation skills and experience. To circumvent the inherent time required—and share the cost involved—in raising equity-based funding, the CFO recommended that BioTools arrange a Liquid Capital purchase order (PO) financing facility. At the same time, the company would continue to look for the right long-term investment support.
”As CFO, my responsibility was to do everything possible to help BioTools succeed, and there were some key challenges. They sell high cost, low volume, extremely complex instruments to leading global research organizations, meaning sales are substantial but intermittent and production is done to order. This model is problematic for most financing companies, but Liquid Capital is boldly unique. They meet one-on-one to understand the client’s product, cash flow cycles and sales challenges; they make recommendations; and most importantly, they tailor financing to the client’s unique situation. In my experience, Liquid Capital solutions consistently exceed my expectation and their competition.”
– Vince Arnette, Regional Director South Florida, The CFO Center
Finding a flexible financing solution
BioTools might have considered a bank loan, but its balance sheet was unlikely to support that. They did get a small loan from a merchant cash advance company, but it was not sufficient. They had also worked with a company that factored receivables, but they specifically need financing based on purchase orders, of which they had a backlog. With strategic investors still in the future pipeline, Liquid Capital was able to provide a fast, flexible solution that really fit the bill.
Flexibility, in fact, was key. The way BioTools’ products are designed, assembled and shipped is not the standard model. Delicate instruments often need additional calibration, and the path to the buyer is not always A to B. Liquid Capital was able to accommodate this alternative production model without delaying the necessary funding.
BioTools now has a PO financing facility that was opened at $1 million, and they can have their credit automatically extended as long as they continue selling to creditworthy customers. With a combination of PO and AR (accounts receivable) financing, BioTools is funding both production as well as other ongoing expenses, such as payroll, rent, etc. As a result, they are in the process of filling their order backlog.
“We have over $1.6M in back orders, but have never been able to finance those POs. Continuing to receive orders that we knew would be sitting on the shelf put us in a terrible position. When Liquid Capital said they could give us a much larger, PO-based facility, it was a godsend. Now we’re happy to get more POs, rather than getting frustrated. It’s really a fantastic facility.”
– Rina Dukor, PHD, founder and president, BioTools
Financing benefits extend beyond the business
With Liquid Capital’s help, BioTools is back on track for production and shipping, and they hope to push all existing back orders out by end-of-year. And this is one case where success is more than a business outcome. There’s a reason BioTools’ customers have been patient; the products they’re waiting for are state-of-the-art and unique, and ensuring they get to the right research people and institutions means a lot more than just making investors happy.
“This isn’t just a financial transaction. The products impact students’ learning and facilitate innovative research in academia and pharma. These are new technologies that will lead to new drugs and better science. Every day these instruments aren’t in the hands of our customers is a day when they won’t discover something new.”
– Rina Dukor, PHD, founder and president, BioTools
Financing for a bright future
With PO financing in place, BioTools is in an excellent position to find new customers and fill more orders going forward. Once the back orders are managed and people know BioTools is stronger than ever, the same customers will be placing more orders, while additional customers who may have been hesitant will start ordering as well.
“I started the business on credit cards and savings, plus a bank line of credit, but it wasn’t enough. Our instruments cost $60,000-100,000 to build. Liquid Capital understood the business model and came through. Getting a CFO was critical as well. In retrospect, I wish we’d had both in place from the outset.”
– Rina Dukor, PHD, founder and president, BioTools
