‘Like Visa for B2B’: Fundbox raises $176 million and hits $1.5 billion in SMB originations
- Fundbox hits a major lending milestone to SMBs.
- The company feels it has a big runway for growth.
Today Fundbox announced it raised $176 million in growth equity as part of a Series C round of funding. The company also secured a $150 million credit facility.
- Fundbox positions itself as a 'B2B payments and credit network'. This basically means that the company provides preferred payment terms as part of a B2B transaction -- an SMB buyer gets standard Net 60 payment terms from Fundbox when making a purchase and the merchant gets paid upfront for the sale.
- "As a B2B payment and credit network, we’re building a network of suppliers and platforms that offer Fundbox as a way to pay," said Fundbox's chief business officer, Sebastian Rymarz. "We offer payment terms — net 60 is convention. We remove the burden from both sides of the transaction, unlock capital tied up in accounts receivable and give buyers more flexible terms."
- In this setup, Fundbox acts as much as a payment company as it does a lender. For example, Fitzroy, a toy and gift distributor, has Fundbox embedded inside its checkout flow giving customers the option to pay by credit card or choose a button to get Net 90 terms. Fundbox can approve a buyer instantly in many cases.
- The company has lent over $1.5 billion on its platform to SMBs in the US. It now has 150,000 connected customers, meaning that they've applied for credit and have connected a business data source giving Fundbox insight into their business' finances. This marks a significant acceleration of its business -- the company announced it had hit the $1 billion milestone just in May.
Fundbox uses partnerships with platforms to reach larger audiences of sellers and buyers.
- Working with Intuit's Quickbooks, businesses can 'clear' invoices they are waiting to get paid on directly from their accounting software.
- Fundbox works with Eventbrite to provide financing for event organizers, who generally have to put out money before an event starts generating ticket sales.
- "We also are working in the payroll space to offer a payroll financing solution," said Rymarz. "Salaries are generally a top expense for SMBs. We help them bridge the gap for a week or two."
This is the biggest round Fundbox has raised to date.
- Who invested: Allianz X, Healthcare of Ontario Pension Plan (HOOPP), HarbourVest, 9Yards Capital, Hamilton Lane, SEB Private Equity (on behalf of clients), Cathay Innovation, Synchrony Financial, MUFG Innovation Partners, Recruit Strategic Partners, GMO Internet Group, and Arbor Ventures invested. Major existing Fundbox investors Khosla Ventures, General Catalyst and Spark Capital Growth also participated.
- Use of proceeds: The company, which has 2 offices in the US and one in Tel Aviv, is thinking globally. "One of the things we intend to do is think about international expansion," said Rymarz. "It's a global problem. The only thing constraining us is focus. The problem exists."
- Visa for B2B: "Investors bought into the size of vision and our momentum and traction," said Rymarz. "We’re doing a great job on execution -- growing and improving our margins. We’re also playing in a space that’s massive and hitting on a concept that some investors think is once in a generation. Visa for B2B -- that’s what we’re building."