How banks arrange loans for customers

Capital for creative minds

Dennis Schmoltzi, co-founder of the Frankfurter Bettzeit Group, has a weakness for optimization. In 2013, he entered a market that has so far been almost textbook-like analog. And, perhaps excusable for the product, rather sleepy and dusty: the market for mattresses. A good night's sleep is vital, just don't buy something online, nothing works without advice. As you make your bed, so you sleep. And mother warns: don't save in the wrong place!

This concentrated skepticism arouses Dennis Schmoltzi's interest. Together with a friend and industry expert, the former McKinsey consultant founded the mattress online shop Dormando, and two years later the mattress start-up Emma with an e-commerce expert.

The three are convinced that no one has to test umpteen different models to find the right mattress. “Taking complexity out of the market” is the goal, and they have succeeded quite well: “One for everyone, that fits,” says Emma founder Max Laarmann. In this “one” they have combined the essential functions of a mattress and invested a lot in research and development. They do well in tests and look chic, because Schmoltzi & Friends position their newcomers like a lifestyle product. It is a wake-up call for the traditionally sedate mattress market, and not the last: In 2016 you take over the specialist retail brand Dunlopillo, now you and your Bettzeit Group are a multi-brand company and at the same time on the move in the stationary and digital world. Emma is the growth driver of the group, goal 2018: doubling sales within twelve months.

"That was a surprise for us"

In just five years, the three founders have set a few new rules. You have digitized, simplified, sell online and offline, B2B and D2C and have created a scalable business model. Your group is one of the fastest growing companies in the industry. They are a case study for the digital transformation of established markets. Daughter Emma is even considered the fastest growing tech start-up in Europe, has been delivering to 14 European countries so far and is planning to conquer additional international markets.

The company is located in the middle of the lively Frankfurt train station district, not even the boss has his own office. This is pure start-up culture, and for every young company that means: If there is a lack of creditworthiness, there are initially no loans. In the early years, the necessary start-up capital comes from friends, business angels or venture capitalists. But at some point Schmoltzi wanted to finance further growth in the traditional way with working capital loans. The company was already break-even by then, but the last available balance sheet was still in the red. When it comes to credit, there is usually nothing going on in such a case. It finally worked, because the consultant responsible had known the company for years. And believed in team, growth and perspective. "That even Deutsche Bank financed us," says Schmoltzi today, "was a surprise for us."

The working capital loan is still the classic of corporate finance. Practically every company uses this well-established form of external financing. It is all too often overlooked that there are also many other forms of financing. When it comes to financing, not everything is good for everyone, but a serious examination of alternative financing methods is always worthwhile. "Many companies could create significantly greater financial leeway in this way," says corporate client boss Stefan Bender. This also gives successful companies completely new perspectives.

Mezzanine financing

The idea: Intermediate form of equity and debt. Suitable for companies with stable cash flow, but too little equity for loan financing, mostly on a case-by-case basis (acquisition, succession, MBO).

It's all about this: Terms of up to seven years are possible, works like outside capital, but strengthens the equity base. Improvement of the rating, retention of the entrepreneurial influence.

Note: The bank is only an intermediary, many individual forms of organization are possible (such as profit participation rights).