In the past few weeks, B2B investment has been busy, though not in the usual spaces. Venture capitalists shied away from alternative lending startups and instead flooded funds to players in the fleet, logistics, eCommerce and financial services space.
This week, however, alternative finance once again secured the top spot for startup financing. Backers continued to spread out their money across an array of B2B sectors in the U.S., Asia and Europe. But with nearly $150 million of investments, alt-lending businesses were back in the lead.
The Breakdown:
Alt-Lending: $149M
Logistics: $42M+
Commerce-as-a-Service: $60M
B2B eCommerce: $36M
Alternative lending startups may have definitively secured the most funding this week, but two B2B logistics startups in India both secured new financing from investors, though how much they raised is a mystery.
On Sunday (July 26), Townrush announced that they raised an undisclosed amount of seed funding in a round led by Lightspeed Venture Partners. While India’s logistics industry is flourishing, according to the company, B2B logistics needs a new approach in order to be successful in the country. “The traditional hub-and-spoke model (by which delivery is centered around fulfillment hubs) would not work at scale at a hyperlocal level,” said Townrush co-founder Saurya Prakash. “You have to rethink traditional logistics models, payments infrastructure and combine it with customer focus to make deliveries a delightful experience.”
That same day, another B2B logistics firm in India also secured an angel investment, also for an undisclosed amount. Delivery automation service Locus secured funding from a range of backers, including GrowX Ventures and Manish Singhal, among others, reports said. The startup provides businesses with predictive analytics, route optimization, and dispatch automation for deliveries, all on a digital platform, allowing eCommerce apps to integrate into Locus directly.
There was one deal in the B2B logistics industry that wasn’t shy about its value. Logicalis, which specializes in IT solutions for businesses, announced that it reached a deal to acquire the technology integration unit of MCPc, a data center and networking solutions provider. “Logicalis gets a high-performing group of engineers and salespeople focused on the enterprise market without all the costs associated with a typical acquisition, and MCPc gets a rich premium based on how the deal was structured,” said an unnamed source in CRN reports. The $42 million buyout, announced Wednesday (July 29), follows reports that Logicalis received $53 million in short-term accounts receivable funding from Commercial Distribution Finance, a unit of GE Capital.
Two deals in the B2B commerce space secured funding this week, but through different business models.
ShopKeep announced Tuesday (July 28) that it secured a $60 million in Series D funding. The firm provides payment services for small, independent merchants, as well as an array of back-end solutions for marketing, inventory and staff management. “ShopKeep has always provided a one-stop-shop for merchants, offering cutting edge technology and 24/7 customer service,” said the firm’s President and CEO Norm Merritt in a statement. “We now play the role of an IT department to small business owners, democratizing invaluable business management tools previously only accessible to the big box retailers.” Merritt added that the investment, led by Activant Capital, will be used to fund client acquisition.
Tuesday also saw a $36 million investment in Hong Kong-based B2B eCommerce site Baisu Electronic Commerce, which operates plastics sales platform Zhao Suliao. The company said the Series B funding, led by an array of backers including Guangxin Capital and IDG Capital Partners, will be used to boost its IT systems and strengthen its market position in the B2B eCommerce space as a top destination for corporate buyers and suppliers of plastics to do business.
Investors may have been shy with their wallets when it comes to funding alternative lending startups in recent weeks, and some speculate that is because the data reveals a decline in alt-lending to small businesses. But this week, alternative finance came out on top when it came to venture capital funding.
Just months after alternative finance startup Dealstruck obtained more than $8 million in financing, the company revealed yet another round, which led to $10 million in backing from investors at Community Investment Management, reports said Monday (July 27). “We’re pleased to be able to add new financing to the marketplace to help support small businesses,” said Dealstruck CEO Ethan Senturia. “The growth in alternative lending has breathed new life into so many small businesses, and growing the capital pool means more access and more opportunity.” Reports said that Dealstruck now has more than $100 million available for small business financing.
The largest investment of the week, pushing alternative lending far into the lead, was the $119 million Series B round going to small business lender and invoice purchaser Behalf. The financing was spearheaded by MissionOG, a VC firm led by former MasterCard CEO Gene Lockhart, with participation from other backers, including Spark Capital, Maverick Ventures and Sequoia Capital. Victory Park Capital also participated by providing equity as well as a credit facility to the company.
According to reports, Behalf plans to use the financing to increase both the number of working capital lines, and the size of those lines, to small businesses in need. The company specializes in providing financing to businesses to cover procurement and other purchases, filling the gap between that purchase and the revenue generated from that purchase. At present, Behalf covers up to $25,000 of a business’ supplier invoice. “Using our credit facility provided by VPC will enable us to serve more vendors and SMB customers, especially in the industries where we have seen the most traction,” said Behalf CEO Benjy Feinberg in a statement.
U.K.-based alternative lending platform Iwoca recently launched a new partnership with China’s eCommerce behemoth Alibaba. As it builds its name in the industry, Iwoca is also gaining attention from investors. On Thursday (July 30), reports revealed that Iwoca received $20 million in Series B funding from Germany’s CommerzVentures and Redline Capital, among others. According to reports, Iwoca will use the funding to strengthen its financial services reach across Europe. “We’re aiming to offer a flexible finance option to all of Europe’s 20 million small businesses,” said the company’s co-founder chief executive Christophe Rieche in a statement. Already, the company operates in the U.K., Germany, Spain and Poland, according to reports.
Altogether, alternative lending startups secured $149 million – not the highest volume of venture capital backing that the space has seen, but the week’s leading industry among VCs nonetheless.
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