Working capital issues, often driven by unpaid invoices, are the catalyst for 25% of SME bankruptcies in France. Finexkap is working on changing all that with their online working capital financial platform, a first in France.
In order to scale-up development and launch lending activities before end 2014, Finexkap have secured $22.5 million in financing. The total investment comprises $7.5 million in Series A funds which will go towards to scaling up their data and product operations, increasing their marketing efforts and making additional strategic hires, while $15 million will go towards financing their lending operations. Leading alternative finance investor GLI Finance was the lead investor on the deal with fintech investment fund Finsight, former COO and board member of LendingClub John Donovan, and Fintech private investors and family offices also joining.
With the annual volume of receivables reaching $800 million and growing 15% last year, France is one of the largest factoring markets (where a business sells its receivables) in the world. This offers significant upside for Finexkap as well as addresses a real market need. In addition, Finexkap has also secured the necessary license required to acquire non-matured receivables on a regular basis. This license, which is gained through a long and involved regulatory review process, also gives them another important advantage in establishing and maintaining a leadership position in this growing space.
In speaking about what makes their platform so innovative, Cédric Teissier and Arthur de Catheu, co-founders and CEOs of Finexkap, add:
“The data-driven models we have developed are applied to a securitisation fund. Our investors have access to this fund without any need to analyse the underlying assets. This differs from the marketplace model where companies auction their receivables that many investors, relying on qualitative rather than solvency tests, in reality do not know how to price. With the latter model, the risk/ return ratio ends up being uncorrelated and it is difficult for such a company to scale to a sustainably profitable size. At the end of the day, our solution enables investors to finance SMEs’ working capital through a diversified exposure to receivables.”
The founder team are already thinking about the next phase as they are already in discussions with other institutional and corporate investors to prepare the Company for the next stage of its growth.