Investors Cozy Up To Invoice Financing

Can it be true? According to new data from PitchBook and reports from Reuters on Thursday (April 14), B2B startups are receiving venture capital at impressive rates, with growth in VC investments surpassing that of B2C startups.

According to the data, B2B startups saw a 40 percent increase in investment in the four quarters ending in March, reaching a total of $11.9 billion in funding.

B2C startup funding still greatly surpasses B2B startup funding, having hit $24 billion in that same timeframe, but researchers found that B2C startup investment actually declined 9 percent.

“This shift reflects a combination of market volatility, high valuations and growing fears of another tech bubble, which have led venture capitalists to reassess risk and back more business-to-business startups over those aimed at consumers,” reports concluded.

So, was this trend reflected in the week’s roundup of B2B venture capital deals?

SME Finance

Kickfurther 

The week began with renowned venture capitalist Bill Tai, partner at Charles River Ventures, showing support (and money) for invoice financing platform Kickfurther. The backer pumped an undisclosed sum of funding into the company, which connects small businesses to financing for outstanding invoices, as well as to access finance against inventory.

Tai, who also cofounded the MaiTai Global Extreme Tech Challenge — in which Kickfurther participated — said in a statement that the company plays a key role amid a slowdown in bank lending to this demographic.

“Consolidation in the banking sector has made it uneconomic for traditional banks to service the millions of small businesses out there,” he stated. “Kickfurther’s solution is showing strong usage and traction because it offers solid returns to individuals who want to back products from companies they really trust and like and grow their money in the process.” 

KredX

Invoice financing has achieved new popularity among SMEs as their large corporate buyers stretch out payment terms. One India-based platform, KredX, announced on Wednesday (April 13) that it had completed a $750,000 angel investment round for its offering in this space.

KredX received the backing from Prime Venure Partners, reports said, and will use the financing to strengthen its portal that connects B2B companies with financiers that want to purchase outstanding invoices for short-term returns. Investors charge a monthly fee for allowing SMEs to draw down a portion of those invoices and charge interest.

According to KredX Cofounder Manish Kumar, the 36 million SMEs in India are “in dire need for working capital.”

The funding will also be used to enhance the platform’s analytics and technology capabilities, reports said.

Enterprise Security

Onfido

In the biggest funding round of the week, enterprise security company Onfido announced a $25 million investment on Thursday (April 14), led by Idinvest Partners. Existing backers Wellington Partners and CrunchFund also participated in the Series B round, reports said.

Onfido targets its security services in the space of background checks, with the U.K.-based startup providing ways to vet new hires and potential customers. On-demand service providers have proven a strong customer base for Onfido, reports noted.

With the new backing, the firm said it will look to build out its automated background check software, to continue its focus on the U.S. market and to build out its machine-learning capabilities. Onfido provides an API to integrate into companies’ existing HR systems, reports said, and is focusing its technological development on aggregate data to identify fraud patterns.

Misc. 

Soundtrack Your Brand

To exemplify the trend of investors choosing B2B startups over B2C ones, Reuters reported an $11 million investment round in Soundtrack Your Brand. It’s hardly a financial startup, but the company shines a light on how a typically consumer-focused space is now infiltrating business services.

Soundtrack Your Brand helps businesses develop music playlists for their brick-and-mortar stores, like Starbucks and McDonald’s. Spotify is one of the top backers of the company, according to reports.

In an interview with Reuters, the startup’s chairman and cofounder, Andreas Liffgarden, pointed to the ability for B2B startups to access bigger wallets than their B2C peers, noting that businesses can pay five times what consumers will pay for music streaming services.

“There is a trend away from consumer unicorns and valuations,” he said. “I can feel it when we’re out fundraising. Investors want real steady cash flow and proven business models.”