UK’s MarketFinance secures $383M to fuel its online loans platform for SMBs

Small and medium businesses regularly face cashflow problems. But if that’s an already-inconvenient predicament, it has been exacerbated to the breaking point for too many during the Covid-19 pandemic. Now, a UK startup called MarketFinance — which has built a loans platform to help SMBs stay afloat through those leaner times — is announcing a big funding infusion of £280 million ($383 million) as it gears up for a new wave of lending requests.

“It’s a good time to lend, at the start of the economic cycle,” CEO and founder Anil Stocker said in an interview.

The funding is coming mostly in the form of debt — money loaned to MarketFinance to in turn loan out to its customers as an approved partner of the UK government’s Recovery Loan Scheme; and £10 million ($14 million) of it is equity that MarketInvoice will be using to continue enhancing its platform.

Italian bank Intesa Sanpaolo S.p.A. and an unnamed “global investment firm” are providing the debt, while the equity portion is being led by Black River Ventures (which has also backed Marqeta, Upgrade, Coursera and Digital Ocean) with participation from existing backer, Barclays Bank PLC. Barclays is a strategic investor: MarketFinance powers the bank’s online SMB loans service. Other investors in the startup include Northzone.

We understand that the company’s valuation is somewhere in the region of under $500 million, but more than $250 million, although officially it is not disclosing any numbers.

Stocker said that MarketFinance has been profitable since 2018, one reason why it’s didn’t give up much equity in this current tranche of funding.

“We are building a sustainable business, and the equity we did raise was to unlock better debt at better prices,” he said. “It can help to post more equity on the balance sheet.” He said the money will be “going into our reserves” and used for new product development, marketing and to continue building out its API connectivity.

That last development is important: it taps into the big wave of “embedded finance” plays we are seeing today, where third parties offer, on their own platforms, loans to customers — with the loan product powered by MarketFinance, similar to what Barclays does currently. The range of companies tapping into this is potentially as vast as the internet itself. The promise of embedded finance is that any online brand that already does business with SMEs could potentially offer those SMEs loans to… do more business together.

MarketFinance began life several years ago as MarketInvoice, with its basic business model focused on providing short-term loans to a given SMB against the value of its unpaid invoices — a practice typically described as invoice finance. The idea at the time was to solve the most immediate cashflow issue faced by SMBs by leveraging the thing (unpaid invoices, which typically would eventually get paid, just not immediately) that caused the cashflow issue in the first place.

A lot of the financing that SMBs get against invoices, though, is mainly in the realm of working capital, helping companies make payroll and pay their own monthly bills. But Stocker said that over time, the startup could see a larger opportunity in providing financing that was of bigger sums and covered more ambitious business expansion goals. That was two years ago, and MarketInvoice rebranded accordingly to MarketFinance. (It still very much offers the invoice-based product.)

The timing turned out to be fortuitous, even if the reason definitely has not been lucky: Covid-19 came along and completely overturned how much of the world works. SMEs have been at the thin edge of that wedge not least because of those cashflow issues and the fact that they simply are less geared to diversification and pivoting due to shifting market forces because of their size.

This presented a big opportunity for MarketInvoice, it turned out.

Stocker said that the early part of the Covid-19 pandemic saw the bulk of loans being taken out to manage business interruptions due to Covid-19. Interruptions could mean business closures, or they could mean simply customers no longer coming as they did before, and so on. “The big theme was frictionless access to funding,” he said, using technology to better and more quickly assess applications digitally with “no meetings with bank managers” and reducing the response time to days from the typical 4-6 weeks that SMBs would have traditionally expected.

If last year was more about “panicking, shoring up or pivoting,” in Stocker’s words, “now what we’re seeing are a bunch of them struggling with supply chain issues, Brexit exacerbations and labor shortages. It’s really hard for them to manage all that.”

He said that the number of loan applications has been through the roof, so no shortage of demand. He estimates that monthly loan requests have been as high as $500 million, a huge sum for one small startup in the UK. It’s selective in what it lends: “We choose to support those we thought will return the money,” he said.

#api, #bank, #barclays, #ceo, #corporate-finance, #coursera, #digital-ocean, #economy, #embedded-finance, #europe, #finance, #funding, #invoice, #loans, #marketfinance, #marketinvoice, #marqeta, #money, #partner, #short-term-loans, #startup-company, #uk-government, #united-kingdom

FreshBooks reaches $1B+ valuation with $130.75M for its SMB-focused accounting platform

FreshBooks, a Toronto-based cloud accounting software company focused on SMBs, announced today it has secured $80.75 million in a Series E round of funding, as well as $50 million in debt financing.

Existing backer Accomplice led the equity financing, which the company described as “an inside round” that propelled FreshBooks to unicorn status with a valuation of “over $1 billion.” 

J.P. Morgan, Gaingels, BMO Technology & Innovation Banking Group and Manulife also participated in the equity investment, along with platform partner and new backer Barclays. With the new capital injection, FreshBooks has now raised a total of more than $200 million in funding over its lifetime.

FreshBooks has built a cloud-based accounting software platform designed to make things like invoicing, expenses, payments, payroll and financial reporting easier for small business owners and self-employed people (and their clients). The company, which says it has served more than 30 million people in over 160 countries, was bootstrapped for the first decade of its life.

As in the case of many startups, FreshBooks was started to solve a pain point for one of its founders. In 2003, FreshBooks’ co-founder Mike McDerment was running a small design agency. When it came to billing clients, he found Word and Excel frustrating to use and felt like they weren’t built to create professional-looking invoices. So he coded his own solution that became the foundation of what is now FreshBooks. The company was self-funded until 2014, when McDerment decided to bring on outside investors and raised $30 million from Oak Investment Partners, Accomplice and Georgian Partners.

In 2019, Don Epperson joined FreshBooks as executive director before transitioning to the role of CEO this year. McDerment, who previously held the position, remains as executive chair of the company.

FreshBooks has 500 employees in Canada, Croatia, Mexico, the Netherlands and the United States — hiring over 100 people in the past year. Also in the last year, the company entered the LatAm market after acquiring Mexico-based e-invoicing company Facturama in September 2020 in an effort to expand its audience in Spanish-speaking markets.

FreshBooks plans to use its new capital toward sales and marketing, research and development and additional strategic acquisitions. 

The company will also use its new funding toward investing in markets that are becoming more regulated and helping owners manage their finances through “simplistic workflows,” according to Epperson.

For example, he said, more business owners are working to become digitally enabled to meet local tax and invoice compliance systems. 

“The need for owners to manage their business digitally has accelerated, and this has changed how small business owners work with bookkeepers and accountants,” Epperson told TechCrunch. “The funding comes as an injection of confidence in our mission to digitally enable small businesses.”

Image Credits: FreshBooks

When it comes to growth metrics like year-over-year revenue percentage growth, the exec was tight-lipped, saying only that FreshBooks has “seen significant growth” in the number of new customers since last year, in part fueled by a pandemic-driven increase in new small businesses.

The pandemic also uncovered the need for us to understand how seismic events affect our customers, Epperson said. 

“After analyzing FreshBooks’ own proprietary data, we learned that businesses owned by women were taking three times longer to recover in the U.S. versus businesses owned by men,” Epperson said. “This stat laid the foundation for conducting more research into how the pandemic was affecting businesses across multiple industries and entering into data-sharing partnerships with local governments to help policymakers enact change in the support available to small business owners.”

Jeff Fagnan, founder and managing partner at Cambridge, Massachusetts-based Accomplice, is clearly bullish on FreshBooks’ potential, saying of his firm’s continued investments in the Canadian company over the past seven years: “With more people choosing self-employment, the FreshBooks team fundamentally believes in the growth of small businesses, and the importance of helping these businesses scale. As insiders, we have better context for how the company is scaling and how the market is growing, and this is why FreshBooks is our largest investment to date.”

FreshBooks is the latest in a growing number of Toronto-based unicorns. Late last month, 1Password raised $100 million in a Series B round of funding that doubled the company’s valuation to $2 billion. 1Password first became a unicorn in 2019.

#accomplice, #accounting-software, #barclays, #canada, #cloud, #finance, #freshbooks, #funding, #fundings-exits, #gaingels, #georgian-partners, #jeff-fagnan, #mike-mcderment, #netherlands, #oak-investment-partners, #payments, #recent-funding, #small-business, #startups, #toronto, #venture-capital

AI cybersecurity provider SentinelOne files for $100M IPO

SentinelOne, a late-stage security startup that helps organizations secure their data using AI and machine learning, has filed for an IPO on the New York Stock Exchange (NYSE).

In an S-1 filing on Thursday, the security company revealed that for the three months ending April 30, its revenues increased by 108% year-on-year to $37.4 million and its customer base grew to 4,700, up from 2,700 a year prior. Despite this pandemic-fueled growth, SentinelOne’s net losses more than doubled from $26.6 million in 2020 to $62.6 million.

“We also expect our operating expenses to increase in the future as we continue to invest for our future growth, including expanding our research and development function to drive further development of our platform, expanding our sales and marketing activities, developing the functionality to expand into adjacent markets, and reaching customers in new geographic locations,” SentinelOne wrote in its filing.

The Mountain View-based company said it intends to list its Class A common stock using the ticker symbol “S” and that details about the price range and number of common shares to be put up for the IPO are yet to be determined. The S-1 filing also identifies Morgan Stanley, Goldman Sachs, Bank of America Securities, Barclays and Wells Fargo Securities as the lead underwriters.

SentinelOne raised $276 million in a funding round in November last year, tripling its $1 billion valuation from February 2020 to $3 billion. At the time, CEO and founder Tomer Weingarten told TechCrunch that an IPO “would be the next logical step” for the company.

SentinelOne, which was founded in 2013 and has raised a total of $696.5 million through eight rounds of funding, is looking to raise up to $100 million in its IPO, and said it’s intending to use the net proceeds to increase its visibility in the cybersecurity marketplace and for product development and other “general corporate processes.”

It added that “may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions, or businesses that complement our business.” The company’s sole acquisition so far took place back in February when it bought high-speed logging startup Scalyr for $155 million.

SentinelOne is going public during a period of heightened public interest in cybersecurity. There has been a wave of high-profile cyberattacks during the COVID-19 pandemic, with hackers taking advantage of widespread remote working necessitated as a result.

One of the biggest attacks saw Russian hackers breach the networks of IT company SolarWinds, enabling them to gain access to government agencies and corporations. SentinelOne’s endpoint protection solution was able to detect and stop the related malicious payload, protecting its customers.

“The world is full of criminals, state actors, and other hostile agents who seek to exfiltrate and exploit data to disrupt our way of life,” Weingarten said in SentinelOne’s SEC filing. “Our mission is to keep the world running by protecting and securing the core pillars of modern infrastructure: data and the systems that store, process, and share information. This is an endless mission as attackers evolve rapidly in their quest to disrupt operations, breach data, turn profit, and inflict damage.”

#artificial-intelligence, #barclays, #ceo, #cloud, #companies, #computing, #goldman-sachs, #initial-public-offering, #machine-learning, #morgan-stanley, #scalyr, #security, #sentinelone, #solarwinds, #system-administration, #u-s-securities-and-exchange-commission

Amount raises $99M at a $1B+ valuation to help banks better compete with fintechs

Amount, a company that provides technology to banks and financial institutions, has raised $99 million in a Series D funding round at a valuation of just over $1 billion.

WestCap, a growth equity firm founded by ex-Airbnb and Blackstone CFO Laurence Tosi, led the round. Hanaco Ventures, Goldman Sachs, Invus Opportunities and Barclays Principal Investments also participated.

Notably, the investment comes just over five months after Amount raised $86 million in a Series C round led by Goldman Sachs Growth at a valuation of $686 million. (The original raise was $81 million, but Barclays Principal Investments invested $5 million as part of a second close of the Series C round). And that round came just three months after the Chicago-based startup quietly raised $58 million in a Series B round in March. The latest funding brings Amount’s total capital raised to $243 million since it spun off from Avant — an online lender that has raised over $600 million in equity — in January of 2020.

So, what kind of technology does Amount provide? 

In simple terms, Amount’s mission is to help financial institutions “go digital in months — not years” and thus, better compete with fintech rivals. The company formed just before the pandemic hit. But as we have all seen, demand for the type of technology Amount has developed has only increased exponentially this year and last.

CEO Adam Hughes says Amount was spun out of Avant to provide enterprise software built specifically for the banking industry. It partners with banks and financial institutions to “rapidly digitize their financial infrastructure and compete in the retail lending and buy now, pay later sectors,” Hughes told TechCrunch.

Specifically, the 400-person company has built what it describes as “battle-tested” retail banking and point-of-sale technology that it claims accelerates digital transformation for financial institutions. The goal is to give those institutions a way to offer “a secure and seamless digital customer and merchant experience” that leverages Amount’s verification and analytics capabilities. 

Image Credits: Amount

HSBC, TD Bank, Regions, Banco Popular and Avant (of course) are among the 10 banks that use Amount’s technology in an effort to simplify their transition to digital financial services. Recently, Barclays US Consumer Bank became one of the first major banks to offer installment point-of-sale options, giving merchants the ability to “white label” POS payments under their own brand (using Amount’s technology).

The pandemic dramatically accelerated banks’ interest in further digitizing the retail lending experience and offering additional buy now, pay later financing options with the rise of e-commerce,” Hughes, former president and COO at Avant, told TechCrunch. “Banks are facing significant disruption risk from fintech competitors, so an Amount partnership can deliver a world-class digital experience with significant go-to-market advantages.”

Also, he points out, consumers’ digital expectations have changed as a result of the forced digital adoption during the pandemic, with bank branches and stores closing and more banking done and more goods and services being purchased online.

Amount delivers retail banking experiences via a variety of channels and a point-of-sale financing product suite, as well as features such as fraud prevention, verification, decisioning engines and account management.

Overall, Amount clients include financial institutions collectively managing nearly $2 trillion in U.S. assets and servicing more than 50 million U.S. customers, according to the company.

Hughes declined to provide any details regarding the company’s financials, saying only that Amount “performed well” as a standalone company in 2020 and that the company is expecting “significant” year-over-year revenue growth in 2021.

Amount plans to use its new capital to further accelerate R&D by investing in its technology and products. It also will be eyeing some acquisitions.

“We see a lot of interesting technology we could layer onto our platform to unlock new asset classes, and acquisition opportunities that would allow us to bring additional features to our platform,” Hughes told TechCrunch.

Avant itself made its first acquisition earlier this year when it picked up Zero Financial, news that TechCrunch covered here.

Kevin Marcus, partner at WestCap, said his firm invested in Amount based on the belief that banks and other financial institutions have “a point-in-time opportunity to democratize access to traditional financial products by accelerating modernization efforts.”

“Amount is the market leader in powering that change,” he said. “Through its best-in-class products, Amount enables financial institutions to enhance and elevate the banking experience for their end customers and maintain a key competitive advantage in the marketplace.”

#airbnb, #amount, #avant, #bank, #banking, #barclays, #blackstone, #chicago, #e-commerce, #economy, #enterprise-software, #finance, #financial-infrastructure, #financial-services, #financial-technology, #fintech, #funding, #fundings-exits, #goldman-sachs, #hanaco-ventures, #hsbc, #ing-group, #invus-group, #laurence-tosi, #market-leader, #money, #recent-funding, #retail-banking, #startup, #startups, #united-states, #venture-capital, #westcap

First Boulevard raises $5M for its digital bank aimed at Black America

The murder of George Floyd last May ignited many things in the United States last year — one of which that was perhaps unexpected: a rise in the number of digital banks targeting the Black community.

Some members of the Black community took their belief that big banks are not meeting their needs and turned them into startup concepts.

One of those startups, First Boulevard (formerly called Theme), has just raised $5 million in seed funding from Barclays, Anthemis and a group of angel investors such as actress Gabrielle Union, Union Square Ventures John Buttrick and AutoZone CFO Jamere Jackson.

For co-founder and CEO Donald Hawkins, the genesis for the Overland, Kansas-bank came after Floyd’s murder, when he and friend Asya Bradley were talking about what they felt Black America “really needed to get out of a vicious cycle” of dealing with the same issues with no real solutions in sight.

CEO Donald Hawkins

COO Asya Bradley

“After viewing yet another tragedy engulf the Black community, and the all-too-familiar protests against persisting issues,” Hawkins said. “it was beyond clear to me that the solutions Black America needs must be financially-focused and developed within our community.”

The pair both had fintech experience. Hawkins had founded Griffin Technologies, a company focused on providing real-time, contextual intelligence to community banks and credit unions. And Bradley most recently was a founding team member and head of revenue at Synapse, a platform that built banking-as-a-service APIs to help bank the unbanked of America by connecting fintech platforms to banking institutions.

They discovered that there were only about 19 Black banks in the U.S., collectively holding about $5 billion in assets.

“And their technology was really behind the times,” Hawkins said. “We also took a hard look at some of the existing digital banks to really see who was really going about it  in the same way that we felt like America needed, and it was pretty clear at that point, that no one was really attacking the issue of helping Black America build some level of financial stability through the form of wealth-building play.”

The pair formed First Boulevard last August under the premise that Black Americans are “massively underserved consumers” of financial products and services despite having a collective spending power of $1.4 trillion annually. The startup’s mission is to empower Black Americans “ to take control of their finances, build wealth and reinvest in the Black economy” via a digitally-native platform.

Part of its goal with the new capital involves building out a Black business marketplace, which will give its members Cash Back for Buying Black™. It also plans to use the money to expand its team, increase its customer base and grow its platform to offer fee-free debit cards, financial education and on developing technology to help members automate their saving and wealth building goals.

History has proven that oppressed communities can succeed when their finances are centralized, and when it comes to financial services for the Black community, a centralizing force is long overdue,” Hawkins said.

The bank’s Cash Back for Buying Black™ program helps members earn up to 15% cashback when they spend money at black-owned businesses. 

“I believe the most recent stat but that also was that 41% of black owned businesses have closed since COVID-19 started,” Hawkins said. “We want to support them as much as we can.”

First Boulevard also is focused on passively building wealth for its communities.

“Black America as a whole has been blocked from learning how money works. We want to connect our members to wealth-building assets such as micro investments like money market accounts, high yield savings and cryptocurrency — things that Black America has largely been blocked from,” Hawkins said.

Bradley, who serves as First Boulevard’s COO, believes the current financial industry was not built to serve the needs of melanated people. Its goal is to take their understanding of the unique needs of the Black community to provide things such as early access to wages, round up savings features, targeted financial education and budgeting tools.

The pair aims to have a “fully inclusive” team that represents the community it’s trying to serve. Currently, its 20-person staff is 60% black, and 85% BIPOC. Two-thirds of its leadership team are women and 100% is BIPOC.

“We are very proud of that considering that in the fintech space, those are not normal numbers from a leadership perspective,” Bradley said.

For Katie Palencsar, an investor at the Female Innovators Lab by Barclays and Anthemis, said that her firm has always recognized “that access to financial services has long remained a challenge despite the digital evolution.”

“This is especially true for Black Americans who often reside in financial deserts and struggle to find platforms that truly look to serve them,” she said. “First Boulevard deeply understands the challenge.”

Palencsar believes that First Boulevard’s mission of helping Black Americans not just bank, but actually build wealth, is unique in the market.

First Boulevard sees the wealth gap that continues to grow within the U.S. and wants to build a digital banking platform that addresses the systemic and structural challenges that face this population while enabling Black Americans and allies to invest in the community,” she said.

The company also recently announced a partnership with Visa, under which First Boulevard will be first to pilot Visa’s new suite of crypto APIs. First Boulevard will also launch a First Boulevard Visa Debit card.

First Boulevard is one of several digital banks geared toward Black Americans that have emerged in recent months. Paybby, a digital bank for the black and brown communities, recently acquired Wicket, a neobank that uses AI and biometric technology to create a personalized experience for users. Hassan Miah, the CEO and founder of Paybby, said the bank’s goal is to be “the leading smart, digital bank for the Black and Brown communities.”

Paybby, which started by offering a bank account and a way to expedite PPP loans, will soon be adding a cryptocurrency savings account for the Black and Brown communities.   

“Black buying power is projected to grow to $1.8 trillion by 2024,” Miah said. “Brown buying power is over $2 trillion. Paybby wants to take a good portion of this multi-trillion dollar market and give it back to these communities.”

Last October, Greenwood raised $3 million in seed funding from private investors to build what it describes as “the first digital banking platform for Black and Latinx people and business owners.”

At the time, co-founder Ryan Glover, founder of Bounce TV network, said it was “no secret that traditional banks have failed the Black and Latinx community.”

#anthemis, #bank, #banking, #barclays, #finance, #financial-services, #financial-technology, #funding, #fundings-exits, #george-floyd, #greenwood, #recent-funding, #startups, #tc, #venture-capital

Barclays adds itemised digital receipts to its banking app in partnership with fintech Flux

Flux, the London fintech that has built a technology platform for banks and merchants to power itemised digital receipts and more, has seen its lengthy pilot with Barclays bear fruit.

Announced formally today — but actually quietly rolled out a few months ago — Flux-powered digital receipts are now available as an opt-in for all U.K. Barclays debit card holders within the bank’s main mobile banking app. Previously, the functionality was only available within the Barclays Launchpad app, which is available for customers that want to try out experimental or upcoming features.

Early last year, Barclays announced that it has invested in Flux, taking a minority stake, so the strengthening of its partnership isn’t too much of a surprise. Flux also went through the Techstars-powered Barclays accelerator in its very early days. However, not all corporate accelerators lead to great outcomes as corporates are notoriously risk-adverse. This one certainly wasn’t rushed but it’s meaningful regardless, giving Flux a major shot in the arm in reaching mainstream banking customers beyond the existing challenger bank partnerships it has forged.

“Customers who pay using their Barclays debit card for future in store purchases at H&M, shoe retailer schuh and food outlets, which include Just Eat and Papa Johns, will see their receipts sent automatically to their app after making a purchase. They can then easily and securely view their receipts whenever they need by tapping on the transaction,” says Barclays. Crucially, although opt-in, Barclays customers will receive a prompt to set up digital receipts when they purchase items from retailers currently on-boarded to Flux.

Founded in 2016 by former early employees at Revolut, Flux bridges the gap between the itemised receipt data captured by a merchant’s point-of-sale (POS) system and what little information typically shows up on your bank statement or mobile banking app. Off the back of this, it can also power loyalty schemes and card-linked offers, as well as give merchants much deeper POS analytics via aggregated and anonymised data on consumer behaviour, such as which products are selling best in unique baskets.

On the banking side, along with Barclays, Flux has partnered with challenger banks Starling and Monzo. Once banking customers link their account to the service, Flux delivers digital receipts (and where available rewards and loyalty) for transactions at Flux retailer partners.

Longer-term, Flux wants to become a standard for the interchange of item level digital receipt data — and the proprietary platform that powers that standard — but has always faced a chicken and egg problem: It needs bank integrations to sign up merchants and it needs merchant integrations to sign up banks. Barclays going live properly is another significant turn in the upstart’s flywheel.

#bank, #banking, #barclays, #europe, #finance, #financial-services, #flux, #fundings-exits, #london, #mobile-banking, #mobile-payments, #startups, #tc, #techstars

(How to fix) 5 common UX mistakes in online banking

Customer support is a huge part of a user’s experience, and one that every bank likes to say they’re great at. But there is a lot we can learn from the mistakes that U.K. banks have made.

Based on his latest research report into the user experience of a dozen leading British banks — including Barclays, HSBC, Santander, Monzo, Starling and Revolut — Built for Mars founder Peter Ramsey shares his top five UX tips for customer support.

We dive deeper into each tip, including discussing the thorny topic of call decision trees (press 1 for … press 2 for … etc.), which Ramsey advises should be depreciated in the age of mobile apps, how push notifications might be employed to provide a more Disney-like queuing experience, why hold music is bad as a concept and why it’s time to ditch the live chat bait and switch.

Get rid of call decision trees

Call decision trees are annoying to use and unnecessary for users who have access to an app. Instead of asking customers to navigate via their telephone’s numeric keypad, use in-context questions inside the app, and then put the full number, including the correct extension, behind a button.

TechCrunch: Perhaps we should clarify what you mean by “call decision trees” and — considering they’ve been an industry standard for years — why is now the time to get rid of them?

Peter Ramsey: The decision tree is that automated “press 1 for … press 2 for … ” process you sometimes have to go through at the beginning of a call. I should clarify: It’s not time to eradicate them entirely, because it’s pretty useful for people who only use telephone banking. But for anyone who has access to an app, it’s totally unnecessary.

#argos, #barclays, #ecommerce, #europe, #extra-crunch, #finance, #financial-services, #fintech, #hsbc, #market-analysis, #monzo, #peter-ramsey, #revolut, #startups, #tc, #usability, #ux