Venture capitalists were fairly quiet in the B2B arena this past week, but financial support for B2B players appeared in other forms. The three main winners in the last few days were alternative lending, B2B logistics, and SaaS startups, collectively seeing a slew of new investment funds, mergers and IPO plans.
Backers let alternative SME lending firms take the cake this week with $374.3 million in cash either going to industry players or being aggregated into funds for future investments. Logistics startups nabbed headlines with two high-profile merger deals, and while SaaS firms saw few direct investments, the space is expected to secure millions through an initial public offering.
PYMNTS takes a closer look at the funds, IPOs, mergers and venture capitalist backing that fueled B2B last week through more than $536.3 million in confirmed and planned investments.
The week kicked off with reports that Canada-based alternative lending platform Crown Capital is gearing up to go public with an IPO to raise $100 million, reports said Friday (June 12). The SME short-term financing service has been servicing the industry for 15 years and has already gone through three successful fundraising rounds, including one for $165 million. Crown Capital initially revealed plans for its IPO earlier this year, but details of the funding plans were scarce until now. The news followed just one day after fellow Canadian alternative SME lending platform Lending Loop revealed seed funding that launched the company into operations.
The attention shifted to Asia when, on Monday (June 15), China showed its latest support of the alternative lending sector, this time through Beijing Kunlun’s $34.3 million investment in U.K.-based P2P lender LendInvest. According to The Financial Times, the deal marked the first foreign investment for the alt-finance company, which is preparing for an initial public offering sometime next year.
Over in Singapore, Edelweiss Alternative Asset Advisors revealed the closing of a $205 million funding round on Tuesday (June 16), following a $230 million fund raised in 2010. According to reports, the funds will be used for loans to businesses in India, a market that, according to Edelweiss executive director and co-head of global asset management Venkat Ramaswamy, has seen expansive demand for working capital among its businesses without the risk of equity. “The activity in the alternatives space in India has picked up significantly over the past year,” added head of Credit Alternatives Ananth Shenoy, “and we are seeing exciting opportunities, especially in the credit space.”
The week closed out in the U.S. as small business lending platform Bond Street revealed a $110 million finance round on Thursday (June 18) thanks to backers Spark Capital and Jefferies bank. According to Bond Street, $100 million of the new funds will go directly to creating more loans for small businesses seeking financing through its online platform. The backing will be crucial considering a recent influx of SMEs seeking loans from the firm. “Our biggest challenge for the past year was not having enough lending capital,” said Bond Street CEO David Haber. “We started seeing quite a demand from our customers just from word of mouth and referrals.”
The B2B logistics sector saw some action, though unfortunately through two deals that could not provide confirmed financial details of investment in the space.
UPS is boosting its B2B efforts, in part through the acquisition of logistics and shipping firm Parcel Pro which was announced Monday. While financial details of the buyout were not revealed, reports said the deal is part of UPS’s efforts to strengthen its enterprise services, which have been growing at a slower pace than its consumer operations in recent months. According to BB&T Capital Markets analyst Kevin Sterling, “[UPS would] love to be more B2B, because it’s more profitable, but of course B2C is the one that’s growing, because of the natural progression of growth in online shopping and eCommerce.” The takeover means UPS will be able to save businesses money by allowing more luxury goods to be packed within the same container while facilitating sufficient insurance for the items, according to reports. Parcel Pro increases the amount of insurance the shippers can purchase for luxury products, which normally must be inefficiently packaged and shipped in separate containers due to insurance limits on a single package.
While the funding isn’t yet official, reports on Wednesday (June 17) said India-based Roadrunnr, which providers hyper-local delivery services for other companies, is in the final stages of securing $10 million from Sequoia Capital and Nexus Venture Partners. According to unnamed sources, Roadrunnr, which was founded earlier this year by two former Flipkart employees, uses an on-demand business model – which is becoming ever-more present in the B2B space – to provide companies with parcel delivery. So far the business has secured deals with restaurants and food aggregators, among others.
The Software-as-a-Service startup industry similarly saw a lack of confirmed funding, though that doesn’t mean backers are ignoring the sector.
Cloud-based SaaS provider Xactly is gearing up for its initial public offering, and on Monday announced the terms of its plans to raise $77 million next week, according to reports. Xactly provides a way for businesses to correlate employee compensation with performance. So far, reports said, the company has booked $64 million in sales in the last year. The company initially revealed its IPO plans in a confidential filing in March.
Venture capital firm Rittenhouse Ventures placed its confidence in Software-as-a-Service for the health care sector with its financial backing of GSI Health for an undisclosed amount. The investment will help to boost GSI Health’s reach into an industry that CEO Lee Jones says is shifting, and needs the software tools to accommodate those changes. “Health care delivery is facing a transformation as the industry moves away from the traditional fee-for-service model and embraces the fee-for-value paradigm,” he said in a statement announcing the investment Tuesday.
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