B2B FinTechs Diversify Funding Strategies With M&A, IPOs

Talk of a decelerating FinTech venture capital market continued to mount this week with reports that digital banking startup Aspiration is struggling to raise money.

According to CNBC reports, the company has recently laid off staff as it works to close another round of funding despite high-profile backing from celebrities like Leonardo DiCaprio and Orlando Bloom, a challenge the publication said is “a potential sign that investors are cooling on risky startups after the WeWork debacle.”

Indeed, WeWork’s recent troubles have shaken confidence in the tech startup funding environment. However recent analysis from Iron Pillar, as reported recently in the Times of India, suggests that such a slowdown may not be detrimental to the B2B FinTech startup arena.

According to Iron Pillar’s report, B2B startups need 50 percent less capital than startups providing consumer-facing products and services if they wish to achieve a $1 billion valuation (unicorn status).

Further, this week’s B2B Venture Capital roundup finds VC funding isn’t the only investment strategy for B2B FinTechs, with (mergers and acquisitions) M&A activity seeking a spike, as well as some high-profile plans by industry players to go public.

Venture Capital Funding

Cardlay, based in the U.K., raised $10 million from SEB Bank and Seed Capital for its commercial card technology. In addition to the new funding, according to Crowdfund Insider reports, Cardlay also announced a partnership with Eurocard, Scandinavia’s largest corporate card issuer, to expand its market share as it looks to connect businesses with value-added services tied to their corporate card products, including travel expense and receipt management.

Also in the U.K., Funding Xchange secured $10.3 million as it prepares to launch its lending-in-a-box offering, according to Asset Finance International. Downing Ventures and Gresham House Ventures led the investment, which will fuel Funding Xchange’s deployment of its white labeled lending offering for other service providers looking to extend small business lending to their own clients. With a focus on integration with payment and accounting platforms, the startup said it will also continue to connect with a broader array of data sources to bolster small to medium-sized business (SMB) loan underwriting for its partners, which include banks and other lenders.

Finland’s Enfuce announced more than $11 million in new funding for its B2B financial services offerings, with Maki.vc leading the investment. Nordea, LähiTapiola and Finnvera also participated, according to SiliconCanals reports. Enfuce targets banks, FinTechs and merchants with its payments and open banking solutions, and it said it plans to use the latest funding to focus on growth and scale.

B2B eCommerce company GoExpedi, which targets the industrial and energy MRO sector, announced $25 million in funding led by Top Tier Capital Partners. CSL Ventures, Crosslink Capital, Bowery Capital, Blue Bear Capital and existing backers also participated. GoExpedi connects businesses in the industrial and energy spaces with a B2B eCommerce platform, supplier sourcing resources, and spend management tools. The company said it plans to fuel geographic expansion and technological investment with the funds as it plans to expand its customer target into the offshore drilling, midstream and downstream markets.

In the largest funding round of the week, alternative small business lender BlueVine Capital announced $102.5 million in funding led by ION Crossover Partners. Lightspeed Venture Partners, Menlo Ventures, 83North, SVB Capital, Nationwide, Citi Ventures, M12 and private investors also participated in the Series F round, which reflects B2B FinTech investors’ focus on later-stage startups. BlueVine said it will use the funding to strengthen its BlueVine Business Banking offering after launching small business checking account services.

M&A

The Access Group, a U.K.-based provider of HR and payroll software, announced two takeover deals. The company plans to acquire People HR and The Payroll Service company. While financial terms of the agreements were not disclosed, Access said the agreements will support its expansion in the payroll market, particularly for SMBs.

In another deal with unknown terms, cross-border payments firm iBanFirst announced the takeover of NBWM, a Netherlands-based foreign exchange (FX) startup. The takeover will connect NBWM’s existing clients to iBanFirst’s services that facilitate cross-border payments and receivables, foreign exchange hedging and risk mitigation tools, and other resources to support global growth. According to BusinessLeader.co.uk reports, the acquisition will enable iBanFirst to process more than $5.5 billion in payments every year.

Accounts payable automation provider Medius struck a deal to acquire eProcurement service provider Wax Digital in a deal that expands Medius’s presence in B2B transactions to processes that occur before a payment takes place. Financial terms of the agreement were not disclosed. Medius’s takeover of Wax allows the company to integrate procurement and supplier sourcing services to offer a more holistic procure-to-pay product suite, the companies noted.

In the small business insurtech space, professional services company Aon announced the takeover of CoverWallet in a deal that will connect Aon to the $200 billion digital insurance market. CoverWallet operates a platform to help SMBs access tailored insurance products. Both companies will apply their data analytics capabilities to combined services.

The most high-profile M&A deal in B2B FinTech this week was the completion of the takeover of Sage Pay, for which Elavon paid $300 million. The acquisition follows Sage Group’s announcement that it was seeking “strategic alternatives for the payments business” as it shifts its focus on accounting and payroll software. Elavon, a merchant acquirer which itself was acquired by U.S. Bancorp in 2001 in a $2.1 billion deal, is moving to strengthen its product offering to help business clients expand in a global economy, the company said.

IPOs

Australia’s Tyro Payments, a payment service provider targeting SMBs, is seeking unicorn status with plans to go public on the Australian Securities Exchange (ASX), reports this week said. In pursuit of its $1 billion valuation, Tyro said its float will seek to raise about $172.32 million, with up to $125 million raised via new shares. The company said the rest will be raised by existing backers’ share sales.

Finally, B2B payments company Bill.com also revealed its intent to go public with plans to raise $100 million on the New York Stock Exchange. Reports said the company will trade under the ticker BILL with Goldman Sachs, Bank of America Securities and Jefferies Group underwriting the IPO. Bill.com’s most recent financials show a year-over-year increase in revenues, with transaction processing volume having grown by 216 percent.