365 Business Finance: Taking

Taking the plunge

SMEs diving into the world of immersive experiences

Martin Kennington Chief Marketing Officer 365 Business Finance

Immersive experiences are taking the entertainment and leisure industry by storm. Post-pandemic, their steady rise in popularity reflects consumers’ desire to connect both virtually and in-person. From escape rooms and theatre to art exhibitions and dining experiences, the trend towards immersive entertainment is growing at an astonishing pace. It is a new approach to creativity. For venues it is an approach that is redefining how we interact.

But it is not all glitz and glamour in the entertainment sector. From large multi-nationals to SMEs, hard work and financial strain define the industry, particularly following the impact of successive lockdowns. More than ever, how an organisation approaches funding can determine its future, and for SMEs, alternative finance can seem like an immersive experience – new, exciting, and redefining how businesses and lenders interact.

Unsurprisingly, the development of virtual reality (VR) and augmented reality (AR) technology has fuelled the progression of immersive experiences further and assisted the rapid growth of the entertainment industry. The pandemic too, which brought enforced isolation, led to an unprecedented reliance on home entertainment. A National Library of Medicine study found that 73.7% of participants considerably increased their TV and internet consumption. Such online experiences have now branched out into innovative in-person events that are gathering pace. As the entertainment and leisure sector looks to bounce back from COVID, immersive experiences are at the leading edge of this recovery.

Here at 365 Business Finance, in 2021 we recorded a 375% increase in funding applications from businesses in the entertainment and leisure sector compared to 2020. Similarly, the average amount advanced for the industry also increased – up by 51% compared to pre-pandemic levels. Some of these businesses were SMEs looking to fund immersive experiences using our merchant cash advance facility.

By way of example, towards the end of last year we provided funding to a business that was previously a ‘traditional’ bar focusing on food and drink as its primary source of revenue. The business pivoted and our cash advance enabled it to open an immersive themed experience, bringing in a new revenue stream through ticket sales.

Another business used our funding to introduce an augmented reality retail experience, which enabled customers to ‘view’ their homeware items in their homes ahead of purchasing in the digital store. We have also funded escape rooms, supercar driving experiences, immersive theatre – even an axe-throwing experience.

Over the next few years, we expect the number of enquiries for funding from entertainment and leisure sector SMEs will grow, particularly from businesses looking to offer immersive experiences. Brokers with clients in this sector should consider merchant cash advances as a borrowing option for their client because not only are they unsecured, but because repayments – which are taken from a small percentage of the SME’s future debit and credit card payments – mirror the ups and downs of the business, easing financial stress, so that if there is a quiet period, they repay less, and when business picks up, they repay more.