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Finmid raises $24.7M to help SMBs access loans through platforms like Wolt | TechCrunch

Finmid raises $24.7M to help SMBs access loans through platforms like Wolt | TechCrunch

Based in Berlin finmid — one of many startups building embedded fintech solutions, in this case targeting markets that want to provide their own payment and financing options — has raised €23 million ($24.7 million) in a Series A round to Its products can be further developed. Markets round value the company at €100 million ($107 million), post money.

Marketplaces—typically two-sided businesses that bring retailers or other third-party providers together with customers to buy their products or services—are classic targets for embedded finance companies, not least because They already host a lot of transactional activity, so it made sense to build more functionality around that to improve their own margins.

Players like Airwallex, Rapyd, Kriya, and many others are among those developing this opportunity. But Funmid believes it has the potential to land more business, particularly in its home region. Small and medium-sized businesses in Europe typically look to banks for loans. The rise of fintech has opened the door for SMBs to access more, more diverse financing sources than ever before, and a growing number are doing so.

The startup believes it makes more sense for SMBs to access capital through business partners than a bank or neobank, and they will. “In an ideal scenario, you don't need to get out of that context,” Max Schertel, co-founder of Finmid, told TechCrunch in an interview.

It also makes sense for marketplaces to offer these services themselves: a captive audience of customers and their customers' customers means they're sitting on a wealth of data that can help generate, e.g. , more personalized financial offers.

As an example of how this works, Schertel said a food delivery brand Volt uses finmid's technology to offer cash advances directly within its app to some of its restaurant partners. Unlike a bank, Wolt has access to a restaurant's sales history, and finmid helps leverage that data to decide who will see a pre-approved financing offer.

Image credit: finmid

Working capital does not come from Vault, but from Finmid's financial partners. Both Finmid and the platform earn a percentage of each transaction. “We have banking relationships with many of the major banks,” Schertel said.

For a platform like Wolt, embedding finmid is a way to make life easier for restaurants while generating additional revenue without any extra effort. It's a fairly straightforward value proposition, as long as partners are willing to give the startup's API a go.

In its early days, selling Funmid's pitch to VCs wasn't easy, Shertel said. Embedded finance may gain a lot of popularity, but it is still an approach that requires partners to sign on to achieve any results. This requires patience that not all VCs will have.

However, Funmid managed to find investors who have stuck around since its launch during the pandemic, helping the company raise €35 million in equity funding to date. Ahead of this new Series A, the company raised €2 million in pre-seed and €10 million in seed funding, Finmid's other co-founder, Alexander Takanitsa, told TechCrunch.

That support seems to be paying off. According to Schertel, once you're running on a platform like the Volt, “success is really compounded.”

“I feel (my) job much better today than I did a year ago,” he joked.

Schertel and Talanitsa met at Challenger Bank. N26Whose founder, Max Tenthal, is now one of their investors with VC firms. Blossom Capital And Early Bird VC.

The co-founders learned an important lesson at N26: financial infrastructure leaves no room for error. “You have to invest a lot in reliability,” Schertel said.

Finmid has an API that connects multiple data points to the platform, and can plug in other sources of information about a potential borrower, just like a bank does.

To further improve the user experience, finmid may allow its clients to display pre-approved capital offers that end users may decide to accept or not.

The company also offers a product called B2B Payments that allows partners to finance trade between their customers. Markets such as Frupro (for fruits and vegetables), Van Wood (for wood) and Vanilla Steel (for metal) use this product.

The new money will go toward hiring, and Schertel said the startup is looking for people with deep experience in specific fields, particularly finance.

The company is also looking to expand to other countries. Italy is first on the list, Shertel said, but there are no plans to open an office there. Takanitsa spends half of her time in Vienna, and Funmid has an office in Berlin.

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