Fintech & e-commerce Startups Venture

B2B Payments Startup Melio Reaches $1.3B Valuation Following $110M Series C2

Illustration of smartphone with money attached. [Dom Guzman]

Melio, a fintech company with a presence in New York and Israel, is giving small businesses a way to digitally manage their business-to-business payments and receivables.

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“We are an accounts payable and accounts receivable tool to enable them to pay any vendors and also let them get paid by business customers,” Melio co-founder and CEO Matan Bar told Crunchbase News.

After raising an $80 million Series C round back in September, led by Coatue and General Catalyst, Coatue is leading a new round of $110 million in what Bar calls a “Series C2.”

The latest funding round takes overall capital raised since the company was founded in 2018 to $256 million, giving the company a valuation of $1.3 billion, Bar said. Of that amount, $240 million was raised in 2020 alone. In addition to Coatue and General Catalyst, investors from previous rounds include Accel, Aleph, Bessemer Venture Partners, Corner Ventures, Latitude, Salesforce 1 and American Express Ventures.

The B2B wholesale payments industry, which includes businesses paying their suppliers for goods and services, is valued at $25 trillion in the U.S., which accounts for 42 percent of B2B transactions. These payments are largely still made with paper checks, said Bar, who was previously a PayPal executive.

The shift to digital in many industries was accelerated by the global pandemic, but Bar said the B2B payments space has been slow to follow, and Melio is out to change that, he added. Its users reduced paper check payments by 50 percent in 2020, compared with the 4 percent to 8 percent decline between 2003 and 2018, according to Federal Reserve data.

“More than $14 trillion of payments are transferred via paper checks in the U.S.,” Bar said. “It is not declining much, but how can the same person use an app like PayPal to transfer money to a friend, but go into the back office of their business and stuff envelopes with checks?”

In 2020, Melio’s monthly active users grew by more than 2,000 percent, which Bar attributes to being in the right place at the right time as small businesses weathered the pandemic and economy.

The new funding will be used to support growth and continue to build out a platform that will enable partners to offer B2B payments to their clients. Bar said QuickBooks is an example: Users will be able to not only add their bills, but also pay their bills from the QuickBooks platform, which is powered by the Melio platform.

Michael Gilroy, general partner at Coatue, said in a written statement that “going digital” is one of the ways that will keep small businesses “ahead of the curve” and in competition with larger rivals.

“Melio has identified both the opportunity and duty to help small businesses manage their finances remotely and improve cash flow, in normal times as well as during this crisis, as physical payments supply chains are interrupted and overwhelmed,” he added.

Illustration: Li-Anne Dias

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