Alternative Finances

Fundbox Picks Up $40 Million For On-Demand Invoicing

Invoice-lending startup Fundbox has pulled in another $40 million from investors to help small businesses survive until they get paid for outstanding invoices, TechCrunch reported on Thursday (March 19).

General Catalyst Partners led the Series B funding round, with participation from NyCa Investment Partners. Existing investors Khosla Ventures, Shlomo Kramer, Blumberg Capital and LionBird were also part of the round. General Catalyst Managing Director Hemant Taneja will join Fundbox's board as part of his firm's investment.

The new money will be used to increase the number of cash advances that Fundbox can make for invoices. CEO Eyal Shinar said the business has grown more than 300 percent quarter-over-quarter in the past 18 months.

Fundbox works as a cash-flow solution for small businesses and freelance contractors. It advances small businesses between $100 and $25,000 in short-term loans, backed by invoices for products or services that have already been delivered. The purpose is to bridge the net-30, net-60 or net-90 gap between delivery and payment. Loans are repaid in installments over 12 weeks, and the total cost of loans over $1,000 is typically less than 7 percent, according to the company's online calculator.

The company's software uses data from the small business' accounting software -- for example, the company tied up last year with time tracking and invoice company Harvest -- and builds a risk profile for each invoice, based on both the company that owes the money and the business that's waiting to collect it.

Business owners can then clear invoices on an individual basis, with the money showing up in their accounts the next business day. They can also reduce the cost of the advance by paying off the remainder of the loan early.

As with many alternative-finance startups, the back-end technology for risk-assessment is critical for Fundbox to be able to make sure it collects its advances. But for dealing with small businesses and freelancers, cost transparency and simple sign-up are also crucial. Shinar said creating an account takes a new customer 15 seconds, and underwriting an invoice takes Fundbox less than a minute.

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