Fundbox, a company that offers loans and financial products to small businesses, has raised $100 million in a Series D round.
The company aims to solve the working capital needs of the small and medium-sized business. It is focused on small businesses.
Prashant Fuloria, the CEO of the company, said that they use artificial intelligence to deliver financial products that small business owners use to better run and grow their businesses.
Fundbox has raised $410 million in equity since it was founded in 2013, with the help of the healthcare of Ontario Pension Plan. New investors included a suite of BNY Mellon funds managed byNewton Investment Management North America, as well as existing backers such as The Private Shares Fund.
Fundbox raised $175 million in a Series C in the year 2019. The company opened its largest office in the U.S. in Dallas that year to take advantage of the talent pool there.
Fundbox is transparent about its finances. The startup, which saw a boost in business due to the Pandemic, crossed $100 million in annual revenue run rate earlier this year. Fuloria said that it is not yet profitable, but that it is well and truly beyond.
The company has connected with over 325,000 small businesses and transacted over $2.5 billion in working capital since it launched its first product, an executive said. Fundbox tripled its new customer acquisition rate. Most of its revenue comes from existing customers. One of the company's biggest strengths is that it is focused on small and medium businesses, rather than consumers.
Fundbox works with small and medium businesses that serve consumers like restaurants, such as businesses that supply food or companies that provide cleaning and staffing services.
B2B businesses have the same challenges as everyone else except that they wait to get paid, according to Fuloria. The capital is tied up in receivables that are not paid. One of the things Fundbox does is give tools to help people get their working capital out of their invoices, which is a huge problem in the U.S. alone. He said that customers can get approval in minutes and have access to capital as soon as the next day.
David Weiden, founding partner and managing director of Fundbox, said his firm was initially impressed with Fundbox's ability to recognize there were "dramatic increases in the availability of relevant data in the small business market."
Only a few companies have any data that demonstrates the effectiveness of their approach, he wrote. Fundbox delivered strong results and are on a path to continued growth.
Fundbox secures $50 million more to power small businesses.
The company's customers range from sole proprietors with a few dozen employees and as little as a few hundred thousand dollars a year or businesses with as much as a few million dollars a year in annual revenue. Fundbox wants its customers to connect with it through their transactional system, such as their invoicing app or bank account.
Fuloria said that they looked at the business transactions sitting in their systems and put together a business graph where the small businesses that are trading with each other are the customers and the connections being their transactions. The picture of the small business economy becomes our picture of the small business economy to derive signals or features that can be used to assess the risk of a B2B transaction or a B2B small business.
Fundbox is an image.
Working capital on tap or the ability to get instant funding against an invoice are some of the tools the company uses to provide. It integrates with other technology. It is integrated inside of QuickBooks. It can be found in FreshBooks' accounting software or in Synchrony's merchant center.
The small businesses are often ignored by large banks because they spend so much money on assessing their risk. It isn't worth it for loans that aren't much more than that. Fundbox offers up to $150,000 in lines of credit.
More than 99% of all decisions are completely automated without any human involvement. That allows us to serve customers very efficiently.
Fundbox is expanding into payments and memberships with the intent of generating a subscription revenue stream. Flex Pay is a new service from the company that is designed to give small business owners additional payment options and flexibility in their business expenses.
Fundbox Line of Credit customers now get three extra days to pay. Repayment options include a bank account, credit card or Line of Credit draw, which are essentially giving small business owners another tool to buy now, pay later, according to Fuloria.
Fundbox plans to develop a product for entrepreneurs with multiple small businesses as well as new businesses that lack the financial history to access capital through traditional means.
Fundbox's performance this year speaks to the market opportunity in disrupting the highly underserved world of small business financing, which has traditionally lag behind consumer financing innovations, according to the VP of HOOPP.