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Another Factor

by: Mike Woelflein, Money Matters
from: ColoradoBiz, July 2001

Banks, venture firms not only financing sources

In 1996, Nigel Alexander was trying to build his five-employee company into one that could take on the world of unified messaging — then a hot-button service with telecom analysts, who said its impact on the industry would be huge.

He was offered venture capital, and turned it down.

“It was available, but at a dilution that we couldn’t accept,” he said. “We were offered $250,000 in exchange for 51 percent of the company.”

Instead, Alexander tramped from bank to bank, looking for a line of credit.

“Banks want to see a history, want to see personal guarantees, want to see a track record of profitability,” he said. “We didn’t have any of that at that time.”

Today, Denver-based Multi-Link Telecommunications has all of that.

Alexander’s company is on the NASDAQ (MLNK). Five employees grew to 170 or so before the telecom crunch last year, which forced Alexander to chop that number to the current 120. Revenues hit $11.3 million last year.

When Alexander turned down the VCs and was turned down by banks, he found another source to get his company going: factoring.

He sold Multi-Link’s accounts receivable to a factor company for the operating cash he needed. In Alexander’s case, Denver-based The Invoice Bankers (a dba for CS Capital) bought the right to collect Multi-Link’s receivables at a discount. The factor charges a “discount” or fee, usually between 2.5 and 3.5 percent of the invoices’ value, and collects them.