Bank-FinTech collaborations have emerged as a viable, lucrative growth path for both sides of these partnerships. For traditional financial institutions (FIs), working with a would-be competitor means integrating technologies for customers without having to build solutions from scratch. For FinTechs, the deals mean access to a broader range of customers through well-established industry names.
This week's B2B Venture Capital roundup shows FIs are placing funding with their FinTech partners, too, including Nationwide and HSBC U.K., investing money in B2B FinTechs disrupting their industries. Elsewhere, B2B FinTechs targeting traditional banks for future collaborations also saw a strong investment week, including one round for a company linking banks with digital software.
10x Future Technologies
U.K.-based building society Nationwide has provided $19.67 million to 10x Future Technologies, a startup focused on improving the banking experience for end-customers. Nationwide's participation in the firm's Series B investment round gives the building society a minority stake in the firm, and will enable the companies to collaborate on developing a digital business banking platform as Nationwide gears up to launch its business current account services later this year. The solution will be targeted toward small firms and sole traders, Mortgage Finance Gazette reports said this week, noting that Nationwide chose 10x because of the startup's similar aim to disrupt and transform business banking.
Investors at Bloc Ventures led a $655,700 investment round in U.K.-based Yordex, a company that provides financial software for corporate users. Reports in Business Leader said Yordex targets cash flow management, invoicing and budgeting processes for businesses with turnover between £1m and £100m, emphasizing the importance of lower processing costs and heightened transparency for corporate finance departments. In a statement, Bloc Ventures CEO and Co-Founder David Leftley said Yordex fills a market gap for companies that have "outgrown" cloud accounting tools like Xero but are not willing to migrate to a costly, complex ERP system.
California's Betterworks announced an addition to its Series B investment round to the tune of $27 million (bringing the total round up to $51 million), with Emergency Capital and Kleiner Perkins leading both Series B rounds, according to a press release. The funding, which also saw participation from seed investors, will fuel product innovation and sales efforts, Betterment said, as it works to expand its presence in the human resources software space. The company offers businesses Continuous Performance Management tools, which integrate goal creation and execution services and provide organizations with an alternative to the yearly performance review.
Alternative small business lending platform Beehive, headquartered in the United Arab Emirates, secured $4 million in fresh funding from Riyad TAQNIA Fund, which tops up the company's Series B funding raised to help the company expand across Southeast Asia and the Gulf. While providing a peer-to-peer lending solution for small business borrowers, the company has also turned toward collaborations with traditional financial institutions, most recently teaming up with Thanachart Bank in Thailand to link joint SMB customers to a Value Chain Financing Program.
HSBC U.K. announced a $26 million investment in B2B eCommerce and spend analytics FinTech Proactis, which will be used to help the company strengthen its position in the small- and medium-sized enterprise market. The investment also comes as Proactis prepares to roll out its Accelerated Payment Facility as it promotes faster B2B payments to small suppliers, and emerges from a more than 15-year partnership with HSBC U.K.
Looking Ahead - Omidyar Network
Omidyar Network, eBay founder Pierre Omidyar's family investment office, is spinning off its investment unit Flourish Ventures to target financial inclusion, reports in TechCrunch revealed. The unit has $300 million ready to invest in companies that focus on making a social impact, an area that could see significant funding for startups that support other small businesses and entrepreneurs. Reports noted that the investment unit already holds 40 FinTechs in its portfolio that target low- to middle-income households as well as small businesses with their services, which include insurance and banking technologies.