Why we doubled down on our investment in Fintecture
Many of the problems that existed within B2B payments when we led Fintecture’s Seed round back in March 2021 (see our previous post on that) remain relevant today. The only difference is that Fintecture has since matured as a company and proven that it can be the panacea to many of those ills. It was therefore a no-brainer for us to continue to invest in the company as part of their recent Series A round.
Looking back — Fintecture’s growth since the Seed round
At the time of the Seed round, Fintecture was still at the very start of their monetisation journey. Now, a year and a half later, they have generated operational and financial metrics placing them firmly within the next stage of their lifecycle. This has been off the back of monthly processed transaction volumes that have increased 60x over the respectable volumes they were already processing back in Q1 2021. They have also continued to onboard pivotal merchants, from around 400 to a little over 1,100 who use the product directly today (in total this is over 7,000 merchants who accept payments directly or indirectly via Fintecture — and over 250,000 buyers). These customers include household names such as Bricoman, Auchan, and Edenred to name a few, most of whom were not customers when we first invested. Moreover, the intention from the very start was for Fintecture to grow into a multi-market player and their expansion into other European countries (such as Spain and Italy for example) has reaffirmed that the problems they are addressing are far from being endemic solely to France. But even more impressive than all of this is that the team has proven strong execution and delivered on shipping their product roadmap objectives.
New payment solutions
Fintecture now boasts a wide range of diverse payment solutions as part of its mission to automate manual and error prone transactions, allowing merchants to accept payments more easily, securely, and transparently. At the time of the Seed round, the offering was relatively modest, consisting of a pay-by-bank (account to account) e-commerce checkout method that leveraged open banking rails (cheaper for the merchant than the interchange-eliciting card payments which are replete with spend ceilings and nonexistent reconciliation). This has since developed to entail several more methods that build upon each other. Even at inception, Fintecture’s tech stack included an algorithmic backbone to orchestrate data in a manner conducive to creating synergies between the various products. Pay-by-bank for example includes a robust KYC (know your customer) process — critical for transactions where businesses buy from other businesses. In that vein of developing features that address business transaction pain points, Fintecture also allows for payment via QR code in-store; this has proven to be a game-changer for situations where small/medium businesses need to be on-site to conduct their purchase e.g. physical goods such as construction materials.
A growing product suite
Once it refined the core infrastructure of actually moving the money, Fintecture looked to expanding its product suite. Building on the proprietary algorithmic approach cited earlier, the combination of that with virtual IBANs enables Fintecture to facilitate instant transaction reconciliation, even generating a link to track the status of money flows. This is a key point that will drive synergy, namely with the next feature they offer: allowing buyers to pay in instalments with a credit line via a partner at 2–4x lower cost than classic BNPL as well as with a payment guarantee (again, leveraging the sophisticated KYC process built in-house). As a result of the real-time status update through the transaction reconciliation, sellers have an up-to-date overview of the credit limits of buyers that matches payments outstanding with buyer repayments. This embedded finance feature has enabled much more efficient credit disbursement. Finally, building on the previously mentioned modules (KYC, instant payments) as well as anti-money laundering features, Fintecture facilitates payouts such as refunds, an automated solution that ties reimbursements with identity and security.
So what’s next for Fintecture?
The team will use the fresh funds for hiring and further product development. The strength of their product suite has allowed them to diversify their business model, which now includes a variable take rate on processed volumes as well as a monthly subscription element. Staying true to their first principles identity, they are using a data-driven approach to discern network effects in relationships between business buyers and merchants. These clusters reaffirm the interconnectivity of business transactions (both offline and online) — something that Fintecture will both benefit from and contribute to proliferating. That is why we at Target Global could not be more thrilled to continue to back Faysal, Anjan, and Reda as they build the preferred transaction platform for B2B merchants.
Financially regulated and headquartered in France, Fintecture has helped their clients to increase their volumes by 15% and save up 40% on transaction costs on average. With 80 employees and offices across France and Spain, the company has raised over 32m Euros since 2021.
Written by Khalil Hefaf and Ricardo Schaefer, Target Global Investment Team, Early Stage
