B2B Payments

B2B Payments Investment Tracker, March 20-27

It was all about the money last week in the B2B world, and not just because the industry saw more than $1.3 billion worth of investments. Those investments largely came in the form of support for money services, whether it be startups helping other business manage their cash, or startups helping other businesses access working capital. Investors are certainly banking on the rise of financial technology adoption by the world’s companies.

The week kicked off on Monday (March 23) with reports that two of the U.K.’s largest mobile wallet service providers, Optimal Payments and Skrill Group, would merge in a deal worth $1.2 billion. The deal will see the combination of Optimal’s Neteller digital payment processing operations with Skrill’s e-wallet service, and have the capacity to process more than 100 payment types in 41 currencies.

While the companies will focus on payment processing for the online gaming market, reports suggest the firms are looking to focus their operations within the EU and U.S., allowing Optimal to take a step back from its dependence on just a few major online gambling corporations in Asia.

According to Optimal Payments CEO and President Joel Leonoff, the merged companies will look to cement their position as a provide of the fast-growing need for digital payments solutions among companies. “The acquisition of Skrill will create a global tech champion in the fast growing digital payments space and we believe represents a transformational leap forward that greatly accelerates our strategic plan,” he said.

Alternative Finance

While Optimal/Skrill was certainly the largest deal last week, other non-merger investments seem to highlight the end of B2B players’ resistance to financial technologies.

Just one day later, on Tuesday (March 24), Symbid revealed a $1 million investment from the Economic Board of Utrecht, based in the Netherlands. As one of the world’s first online crowdfunding platforms for small businesses, Symbid has facilitated the access to working capital for SMEs thanks to tens of thousands of private investors and 40 institutional lenders, too, though the company’s The Funding Network.

“This collaboration is really about simplifying the way our small businesses find funding at a time when bank financing is increasingly out of reach,” said Korstiaan Zandvliet, co-founder and CEO of Symbid. “We believe that by connecting alternative and traditional finance with standardized data protocols, The Funding Network enables a more efficient and transparent way of doing business.”

The funding, Symbid said, will be used to accelerate its efforts to become the premier lending source for small businesses, which can access both traditional and alternative forms of capital on The Funding Network. For investors, Symbid said, they can enjoy transparency regarding the risks and expected investment returns through the platform.

That same day, the small business lending market saw another financial boost thanks to a group of venture capitalists raising $20.5 million for Lendio. The company is an online matchmaker for small businesses looking for working capital, allowing business owners to answer a questionnaire online and automatically be matched up with qualified investors.

The funding was spearheaded by several VCs including Napier Park Financial Partners Group, Pivot Investment Partners and Blumberg Capital, the latter of which also took part in last week’s high-profile $40 million in funding to another alternative lending player, Fundbox.

Altogether, Lendio, which operates with about 100 lenders, has raised more than $30 million.

Financial Services

For small businesses that already have working capital but need help managing their cash flow, VCs also came through with funding. On Wednesday (March 25), reports emerged that Accion Venture Lab and Artha Initiative led a Series A funding round for India-based Artoo IT Solutions, raising $500,000.

Artoo offers financial customer relationship management tools. According to the company, the firm is dedicated to utilizing the power of innovative technology to help SMEs in the financial sector with tools that offer sales visibility, financial analysis, cash flow management and other services.

The funding, Artoo founder and CEO Sameer Sega said, will be used to expand throughout Southeast Asia – starting in the Philippines – and to focus on developing new technologies for customers of these smaller financial firms.

“We have found our value proposition with our clients and now it’s time to further penetrate the SME lending market and now we want to look at mainstream banks,” he said.

According to Accion Venture Lab senior investment analyst Rishabh Khosla, the funding aids a market that needs innovative technology to see further success. “To enable microfinance (and financial services in general) move into the digital age, we need tools and technologies like Artoo to support this transition. In India, there is tremendous government and private sector push to enable better credit to underserved consumers and micro-small businesses,” he told reporters.

That same day, cloud enterprise resource planning service provider FinancialForce announced $110 million in new backing from Technology Crossover Ventures and Salesforce Ventures, one of the original funders of the startup. The B2B SaaS service specializes in project management and accounting solutions for businesses.

While FinancialForce CEO Jeremy Roche said that because the firm operates with cloud technology, it has a leg-up over the competition. “But you’ve still got to build out enterprise grade products and this funding certainly allows us to prepare for the future,” he added.

Venture capitalists last week pumped millions into the B2B sector with a keen eye on the small business financing market. Thanks to their funding, it would seem B2B players are getting smart with their money and brushing off the technology-phobic stereotype.


Featured PYMNTS Study:

More than 63 percent of merchant service providers (MSPs) want to overhaul their core payment processing systems so they can up their value-added services (VAS) game. It’s tough, though, since many of these systems date back to the pre-digital era. In the January 2020 Optimizing Merchant Services Playbook, PYMNTS unpacks what 200 MSPs say is key to delivering the VAS agenda that is critical to their success.

Click to comment