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The round included a mix of investors, including Arbor Ventures, Allianz X, Cathay Innovation, Healthcare of Ontario Pension Plan and GMO Internet Group. Existing investors Khosla Ventures, General Catalyst, and Spark Capital Growth also participated in the round.
The decision to raise money from institutional investors stemmed from the company’s desire to diversify its investor base as it eyes an international expansion in the future, chief business officer Sebastian Rymarz said in an interview.
“We’re going to be looking to expand the business so we wanted to make sure we had a diversified group of investors to help with that so you’re going to see some international names,” Rymarz said.
Its total funding to date is $433.5 million, according to Crunchbase. In making the funding announcement, Fundbox also said it has secured a $150 million credit facility.
An Uncertain Day To Day
Fundbox wants to refresh “antiquated payment systems which stifle business growth” in businesses, said Eyal Shinar, the founder and CEO of Fundbox in a statement.
For context, many small businesses experience daily uncertainty because they rely on invoices, a time consuming, outdated paper process. Slow sales during the holidays and unexpected emergencies also make small business operations challenging.
Fundbox steps in with a line of credit, giving the neighborhood coffee shop owner (for example) a cash influx when it’s needed. Fundbox will underwrite an invoice in less than a minute, and the value will show up in the company’s bank account the next business day, according to the company’s site. Businesses can then pay in equal installments over the course of a 12 or 24 week plan, with credit replenishing as they pay. Additionally, if a business pays early then it will save on interest.
The company integrates with existing invoice providers, such as FreshBooks and Xero.
If you want a $100,000 loan, Fundbox’s max loan, it looks a little like this:
For a business owner, that credit can translate to a new coffee roasting machine, or new crop of employees.
Some Critics Say
Fundbox requires no paperwork and no personal credit investigation for a business to apply; the business just has to have been open for three months, according to the website. For businesses with poor credit, or that are too new to apply for a traditional loan, this is golden.
Naturally, however, there are critics of the system. While Fundbox claims it caters to companies of all sizes, $100,000 for a big business may not cut it. Additionally, some say the company’s low access to entry mean it has higher fees and rates, which depend on statistics like account status and how long you’ve been using Fundbox. Finally, privacy is a concern, as one blogger points out. Fundbox is working with risky clients and requests access to intimate information, so clarity on record storage and encryption is needed.
Other fintech startups focusing on alternative lending include FastPay, a lending financial workflow solution, BlueVine, a provider of online capital solutions to small and medium sized businesses, and SnapCap, a lender that provides small business loans.
Illustration Credit: Li-Anne Dias