B2B Payments

Investors Diversify Their B2B Funding


Last week, American Express and Dun & Bradstreet released new research that found the middle-market business landscape of the U.S. is seeing some changes. While manufacturing and wholesale trade continue to take the top spots in this population of businesses, business services are increasingly accounting for a greater portion of mid-market businesses.

If our latest B2B venture capital roundup is any sign, business services seem to be making some waves among the startup community, too. This week, the majority of the seven funding rounds closed took place for startups providing some type of service to fellow businesses — whether it be helping companies in their hiring efforts, migrating to the cloud or scheduling.

Alternative lending made its latest appearance on the board, and several investors announced the closing of new funds last week, too. While the $82.75 million raised in the last few days certainly isn’t the highest value of B2B venture capital ever recorded, it’s nice to know that more funds are on the way.


Business Services


The week began with $10.5 million in Series B funding announced Monday (Jan. 25). Led by HSBC with participation from Aster Capital, Newfund Capital and True Global Ventures, the funds landed in the hands of CustomerMatrix, a technology startup that provides banks and FIs with a way to use cognitive computing to identify revenue opportunities. According to reports, the company’s technology identifies actions for banks’ consumer-facing employees to take and puts those actions into employee workflows. The company operates in France and Hong Kong, reports said.


The next day (Jan. 26), U.S.-based Grovo announced $40 million in Series C financing as VCs lent their support for the company’s enterprise training platform. Backers include Invoice2go CEO Greg Waldorf, Accel Partners (again), Costanoa Venture Capital and SoftTech, among others. Grovo provides companies with a way to help train and educate their employees; according to reports, existing clients include WeWork and Chevron.


Tuesday (Jan. 26) also saw a $20 million Series B investment round for Jitterbit, a company that helps businesses migrate from legacy systems to cloud-based APIs and other services. Reports said KKR led the funding for the startup, which provides its services to players in a slew of industries, including manufacturing, education, software and health care.


Accel Partners made another B2B investment move when, on Thursday (Jan. 28), B2B service company JOB TODAY announced $10 million worth of Series A funding. Accel was joined by Felix Capital and Mangrove Capital Partners in the round, reports said.

JOB TODAY provides an online platform for small businesses in the services industry to find new employees. It’s a space the company says does not need traditional resumes; instead, JOB TODAY allows applicants to upload basic information onto its platform, and the rest is carried out via instant messaging between an employer and applicant.


Closing out the week is Cronofy, another B2B services startup. The U.K. company announced $1.6 million in seed funding led by Firestartr and henQ, according to Friday (Jan. 29) reports.

Cronofy offers a calendar API that allows businesses to synchronize the schedules of the company and its corporate clients and partners, as well as its staff. Via the One Diary tool, Cronofy can integrate enterprise apps with client calendars in real time. According to the firm’s founder, Adam Bird, it does for calendar coordination what Stripe has done for payments.


SME Finance


India’s B2B venture capital streak didn’t end in 2015. The nation saw renewed interest for alternative small business finance when Monday (Jan. 25) reports revealed new funding for Power2SME, an online portal for small businesses to find financial backing.

Several investors, including Accel Partners, Kalaari Capital, Inventus Capital and Infosys, participated in the funding round, but parties declined to reveal how much Power2SME raised. The company not only links SMEs to lenders but also connects businesses with an online platform to source and procure raw materials.


India’s SME lending sector may be picking up steam, but over in the U.K., the market is so large that some are beginning to wonder whether it’s oversaturated. Investors at SpeedInvest don’t seem to think so. The firm just led a funding round for invoice financing marketplace Investly, which announced on Wednesday (Jan. 27) the $650,000 investment while rolling out operations in the U.K.

Investly began in Estonia and offers a single portal for businesses to apply for and receive funding for outstanding invoices. While the U.K. is one of the world’s largest alternative lending markets, invoice financing could gain traction against other financing products as the nation continues to struggle with its late payments problems among small suppliers.


Looking Back And Looking Ahead

Worth mentioning are two startups that revealed some more information about their venture capital funding — one that disclosed the value of a funding round initially announced at the end of 2015 and one that disclosed plans to reveal incoming seed funding in the near future.


India B2B eCommerce platform Industrybuying.com announced late last year that it secured an undisclosed amount of funding from Trifecta Capital. Reports published Monday (Jan. 25) have finally revealed how much was raised: roughly $1.8 million. IndustryBuying.com said it would use this funding to fuel growth of its enterprise services arm, a unit of the company that aids businesses in negotiating rates and prices when procuring goods through the platform.


Looking ahead, NexChange, which calls itself the “Facebook for bankers,” said in an interview with FinBuzz on Friday (Jan. 29) that it is “weeks away” from disclosing the results of its seed fundraising round. NexChange offers professionals in the finance space a mobile platform to connect with peers and exchange news, data, research and more.

For Founder Juwan Lee, NexChange was a response to the need for a new generation of financial professionals to prepare for the disruption that financial services players will bring. He added that crowdfunding may surpass venture capital funding this year.


Lining Up New Investments

It certainly wasn’t the most valuable week for B2B startups, but the last seven days also uncovered new plans among venture capitalists to up their B2B investments.

Rakuten Ventures has showed up several times in the B2B venture capital roundup, and the firm is likely to keep its presence known in this space. The company said Wednesday (Jan. 27) that it has launched a fund worth about $84 million to provide funding for Internet startups across Japan.

Rakuten Ventures has provided funding for companies across the globe, and in Japan, Managing Partner SaeMin Ahn told reporters that the fund will focus on a diverse range of startups. We won’t be surprised if many of them are B2B service providers — existing members of its portfolio include Flipkart, which operates B2B eCommerce operations, and ViSenze, an inventory management firm.

Also Wednesday, Blockchain Capital announced the closing of a $13 million fund. While the firm remains true to its namesake, having already invested in multiple blockchain and digital currency startups, Blockchain Capital said this year will be the first in which the market sees new investments in this arena for startups operating in segments other than financial services.

“You’re going to see the use of other blockchains beyond bitcoin, such as these permissioned ledgers that a lot of financial institutions are interested in, but also even other public blockchains like Ethereum,” predicted the firm’s cofounder and managing partner, Brock Pierce, in an interview with Forbes.

On Thursday (Jan. 28), Laconia Capital Group issued a release announcing the closure of its new venture capital fund geared towards B2B startups to provide late-stage funding. Laconia did not reveal how much the fund is worth but noted that it will be looking for companies in the B2B Software-as-a-Service industry that have a strong revenue stream and “relatively light future capital requirements.”

It’s a strategy reflecting the shaky future of venture capital funding, as some analysts worry that the unicorn bubble is about to burst.

“This is an excellent time to discover quality companies on the cusp of scalability, especially now that valuations are stabilizing and may be falling,” said Laconia Cofounder and Managing Director David Arcara in a statement.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.