Has the start of the holiday season brought venture capitalists into the giving spirit? It seems like it, as VCs provided more than $127 million (the most we’ve seen in a while) to startups serving fellow businesses. The big winners this week? SMEs, as investors seemed to flock to startups providing financial services for this crowd. We break down the action, which uncovers a potential new trend in logistics VC funding, as well as continuing momentum for blockchain’s potential.
Do we detect a new B2B venture capital trend on the rise? VCs interested in logistics startups have largely been attracted to the on-demand delivery space, but last week, Flexe revealed funding for its business model, which allows companies to rent out unused warehouse storage space for other companies in need.
On Monday (Nov. 16), Australian startup Spacer announced its own funding for a similar prospect. The company said it secured $1 million from angel and private investors for its services, which provides an online marketplace for companies to sell and buy open storage space. Spacer CEO and Co-Founder Michael Rosenbaum said in a statement, “Space is the new tradable commodity in the sharing economy which is not surprising given the high density living in Australia’s capital cities, which has resulted in some people having space and many others needing additional space.”
Spacer does boast one major difference from Flexe: The service can be used by both businesses and consumers, meaning it can serve as a source for storage space from anything from boats and cars to machinery and other equipment – not necessarily inventory.
Also on Monday, Japan-based BizGround was reported to have secured $815,000 for its Bizer service, a cloud back-office service provider for small- and medium-sized businesses. Salesforce Ventures and Incubate Fund participated in the round, reports said. Bizer took the opportunity in announcing its funding to also roll out a platform overhaul, as well as support for mobile devices. Bizer’s biggest strength? Helping SMEs make the cloud transition, analysts said.
It was the start to SME-targeted funding, with the next few days leading to millions for small business FinServ startups.
Wednesday (Nov. 18) brought the news that Route 66 helped Chicago-based SME lender LQD Business Finance close a $30 million credit facility to extend its structured small business financing operations. The funding will also propel LQD’s vision to fix what’s wrong in SME lending today.
According to LQD CEO George Souri, bank lending, online cash advances, or P2P loans are essentially the three options for small businesses in need of financing. “Each of these options, however, has significant limitations,” he said in a statement. “Since we started development, our intention was to fix the flaws in these early small business lending models,” he added, explaining that LQD wants to “replace the bank” for SMEs, “instead of just taking share at the margins.”
That same day, small business banking service provider Ebury revealed that it raised $83 million in a funding round spearheaded by Vitruvian partners. According to reports, Ebury helps small businesses accept payments from overseas payers, easing cross-border transaction frictions.
In a statement announcing the funding, Vitruvian partner Stephen Byrne said the company “is disrupting the traditional banking market, supporting international business with financial services historically out of reach for all but the largest companies, all at low cost and high service levels.” Ebury CEO and Co-Founder Salvador Garcia stated that the backing will support the company’s expansion throughout Europe and its launch in the U.S., expected sometime next year
Blockchain startups had a lucrative few days, too. First off, Kleiner Perkins Caufield & Byers made moves in the blockchain world this week when it led a $12.5 million Series A funding round for San Francisco-based Align Commerce, a startup eyeing bitcoin to fuel cross-border B2B payments, and aiming its solutions toward the small business market. Align uses bitcoin to exchange a payer’s money into the cryptocurrency, which is then exchanged again into the recipient’s currency, meaning bitcoin remains out of sight for corporate clients, reports said. For Kleiner, the funding was its first time participating in a financing round for this type of company. In fact, general partner Randy Komisar has reportedly been uninterested in bitcoin services in the past, but Align’s ability to keep the technology behind-the-scenes for businesses is what attracted him to the startup, he told The Wall Street Journal on Tuesday (Nov. 17).
Alright, so much of this week placed the VC spotlight on SMEs. But one deal suggests VCs aren’t all about the little guys. Route 66 Ventures made a second appearance when it, Tellurian Capital Management, Nyca Partners and others banded together to raise funds (an undisclosed amount) for blockchain innovator Clearmatics Technologies, a startup already working with UBS to implement its digital coin technology into a new payment system. According to Wednesday reports, this was Clearmatics’ first investment round. The company struck its UBS collaboration only months ago as the bank looks to facilitate ways to use blockchain technology for cross-border payments and ease friction in trade settlement.
[bctt tweet=”Startups are pushing for more sophisticated money solutions for SMEs”]
From storage needs to cloud SaaS, to lending and banking services, startups that scored this week are pushing for more sophisticated money solutions for small- and medium-sized businesses. But with two major deals in the blockchain space, it seems venture capitalists are far from having tunnel vision. After all, many analysts say the potential of the blockchain has the power to overhaul payments as we know it, and that means big changes for SMEs and multinational conglomerates alike.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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