Investors Haven’t Forgotten About Alternative SMB Finance

By now, the alternative lending market is hardly new, and investor appetite for startups in the space seems to have waned. But every few weeks, the industry roars back with an impressive investment streak. This week, alternative finance companies raised more than $77 million in venture capital funding, accounting for nearly 70 percent of total funds raised by B2B FinTech startups this week. Sure, it shows that investors aren’t ready to give up on alternative lending just yet. But the biggest winner of the week shows that backers are looking at startups that offer more than SMB finance, and understand that lending is just part of a holistic B2B payments service.

SMB Finance

Finiata

Germany’s Finiata announced $21.2 million in new funding this week, $11.8 million of which comes in the form of Series A venture capital provided by DN Capital, ENERN, Fly Ventures, Kulczyk Investments, Point Nine Capital and Redalpine. Reports in TechCrunch said the company targets smaller businesses, including sole contractors and freelancers, with its invoice financing service. According to Finiata, smaller companies and one-person firms struggle to access affordable financing in Germany. In addition to its financing service, the company also uses its own underwriting solution that analyzes traditional and alternative data sets.

iZettle

Sweden’s iZettle initially began as a point-of-sale (POS) company, but the firm has added offerings to its suite, including invoice software and SMB financing. The company reportedly raised $47 million in funding this week — funds that will go toward helping the business expand into new markets across Latin America and Europe as it positions itself against top rivals PayPal and Square. Dawn Capital led the latest funding round, reports said, while Fourth Swedish National Pension Fund and other backers also participated. In addition to expansion, iZettle is reportedly exploring technologies like deep learning to boost services that rely on complex data analytics.

Veritas Finance

Based in India, Veritas Finance provides financing solutions to micro and small businesses in the country via working capital, medium-term loans and long-term loans. Reports this week said the firm recently raised $18.6 million in Series B funding, led by U.K. development finance institution CDC Group. Lok Capital and other investors also participated. The funding, Veritas said, will be used to focus on product innovation and expand further across India.

Artificial Intelligence

Kasisto

Kasisto develops AI-powered services like conversational chatbots for businesses in the financial services space. With $17 million in fresh funding, the company said it plans to scale the business and deepen its existing B2B partnerships, while it also plans to introduce new products. Oak HC/FT led the Series B funding round, reports said, which also saw participation from Mastercard, Propel Venture Partners, Two Sigma Ventures, Commerce Ventures and Partnership Fund for New York City. Its existing clients include TD Bank and Standard Chartered Bank. While chatbots are traditionally viewed as a consumer-facing service, the technology is beginning to take root in corporate banking services, especially in the SMB market, so it’s no stretch to imagine Kasisto creating solutions that are used by small business customers of bank partners.

Enterprise Security

Simility

Simility plans to use the $17.5 million in funding it just raised to continue growing in the fraud and risk management industry. The company announced the investment this week, noting that backers at Accel and PayPal provided the funds, which will also be used to continue growth across North America, Latin America, Europe and Asia. The company deploys machine learning technology for its fraud detection services used by companies large and small. Its services can detect several different types of fraud, reports said, including account origination fraud and account takeover fraud.