B2B Payments

B2B’s $2B Investment Week — With A Catch

My, how the B2B venture capital tables have turned. Amid talk of a VC slump and a unicorn bubble, B2B startups saw only modest attention towards the end of last year. But in 2016, the industry has hit the ground running, and the investment spree of last week continued right through into the next.

The biggest winner of the week was, without a doubt, the small business financing sector. Investments in this space topped $1.1 billion alone, hitting startups across Asia and the U.S.

And if that weren’t impressive enough, the B2B startup space as a whole saw nearly $2 billion in total funding from venture capitalists — shattering any doubts of a lull in this arena. See the breakdown of funding rounds below.

The Breakdown
SME Finance: $1.12B
Logistics: $700M
Big Data: $45M
eCommerce-as-a-Service: $18.7M

 

SME Finance

JD Finance

China’s JD Finance, the unit of the eCommerce conglomerate that provides financing to the companies using its B2B and B2C online sales platform, is said to be in the middle of securing an impressive $911 million in Series A funding, led by Sequoia Capital, reports said Friday (Jan. 15).

Only weeks ago, reports emerged that JD Finance would be looking for funding as it preps for its rumored IPO next year. The financing has yet to be completed and was only revealed after media obtained internal documents from the company. But once finished, JD Finance will be worth $7 billion.

JD.com is competing with its top rival, Alibaba, whose own seller financing unit, Ant Financial, is also reportedly in the process of seeking up to $1.5 billion for its latest investment round before the company plans to go public in the near future.

NeoGrowth Credit, Satin Creditcare, Saija Finance

On Monday (Jan. 18), reports from India said that IFMR Investments disclosed a $36 million debt fund and that it had already provided a total of $10.15 million across three startups in the FinTech space. NeoGrowth Credit, Satin Creditcare Network and Saija Finance all secured financing, with the latter two operating as microlenders and NeoGrowth operating as a small business lending company.

BlueVine

Just days later, small business factoring company BlueVine revealed $40 million in Series C financing. The announcement, made Wednesday (Jan. 20), saw participation from Rakuten FinTech Fund, Lightspeed Venture Partners, 83NORTH, Correlation Ventures and others, reports said.

In a recent interview with PYMNTS, BlueVine CEO Eyal Lifshitz explained why the company’s focus on factoring is such a difficult one.

“When you extend credit, you have one party to deal with, but with factoring, we have two parties in our clients: [the suppliers] and their clients [the buyers],” the executive said. “We have to know how to do wires, ACH, checks, and then we also need to do payments well enough to be receiving them from hundreds of thousands of debtors. That requires fast and automatic invoice matching.”

WeLab

Asia made its mark on the board yet again in the SME financing industry, with Hong Kong- and Beijing-based WeLab revealing Thursday (Jan. 21) a $160 million Series B funding round. The company saw support from Khazanah Nasional Berhad, ING Bank and Guangdong Technology Financial Group.

The company provides small businesses with a lending platform via its Wolaidai unit and a consumer financing side via WeLand.hk. Both, reports said, aim to provide consumers and small business owners with access to working capital, even if they have limited access to a bank or credit history. The company said the new funding will go towards strengthening its technology, which is geared towards assessing borrower risk, and boosting its ties with financial institutions and corporations. WeLab is also looking to launch an eCommerce site in the near future, reports added.

 

Logistics

Best Logistics Technologies

China saw even more VC action, with one of its logistics companies revealing that it’s in the process of new financing this week. Friday (Jan. 15) reports said Best Logistics Technologies will seek to raise $700 million in a new funding round, ahead of its own IPO.

The plans were revealed through a disclosure statement filed by the World Bank’s investment unit, International Finance Corp., which is reportedly looking to invest up to $30 million in the Chinese logistics firm. Reports said Best Logistics will eye expansion with the new funding.

 

Big Data

Foursquare

Foursquare is known as the mobile app that lets consumers notify their friends about where they are and what they’re doing. It may seem menial, but all of that information translates into massive amounts of consumer data that other businesses are eager to get their hands on. As Foursquare pivots to this B2B model, the company announced late last week that it secured $45 million from investors.

The Thursday (Jan. 14) news revealed that Union Square Ventures, Morgan Stanley and other existing investors participated in the Series E round. And while $45 million is nothing to scoff at, analysts noted that the funding means Foursquare is now valued at just half what it was three years ago.

 

eCommerce-as-a-Service

KartRocket

On Monday (Jan. 18), another funding round emerged in India, this time with KartRocket revealing a $6 million round to help SMEs in the nation launch online sales efforts. Backers included Bertelsmann India Investments, along with existing investors Nirvana Digital India Fund, 500 Startups (based in the U.S.) and Beenext (based in Singapore). In addition to helping SMEs get online, KartRocket provides logistics and payment capabilities and integrations into existing B2C digital marketplaces.

Brightpearl

Tuesday (Jan. 19) reports revealed $11 million provided to Brightpearl, an eCommerce-as-a-Service company that provides businesses with online sales, logistics, inventory and accounting solutions. The funding was led by Eden Ventures, with participation from MMC Ventures and Notion Capital. One of Brightpearl’s largest partners is China’s Alibaba, a collaboration that allows business clients of Brightpearl to source and procure from Alibaba via an integrated app.

eRated

Also Tuesday (Jan. 19), another startup nabbed $1.7 million in seed financing. While not exactly an eCommerce-as-a-Service company, eRated does help businesses improve their eCommerce efforts by providing a single portal through which online sellers can be rated, even as they operate across multiple eCommerce portals. The firm aggregates data from their performance and operations across the Web and helps that seller improve their business practices by getting a holistic view of sales history, ratings and credentials.

 

Recap

B2B startups are making it rain. OK, so that $700 million investment in Best Logistics Technologies hasn’t technically closed yet, and that $911 million round for JD Finance is still in progress. And nearly $18 million of the funding this week went to B2B companies that are helping sellers with their B2C sales efforts.

Still, with nearly $2 billion provided, there is no denying that B2B startups are having a good year already. And with so many funding rounds hitting it big in Asia, the market will be one to watch throughout the rest of the first quarter.

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