Behalf just raised an impressively large Series B in an equity and credit financing round. As the online lending sector soars, Behalf carves out a special niche
If you’ve ever owed vendors, a company that could help you pay those vendors on your behalf without charging exorbitant fees might sound too good to be true. But Israeli Behalf does just that – and raised one of the largest Series B rounds in the Startup Nation in the last several years.
On Wednesday, the company announced that they received $119 million in equity and credit financing from MissionOG, which led the round. Its chairman Gene Lockhart will also join Behalf’s board of directors. New investors Victory Park Capital and Maverick Ventures and existing investors Spark Capital and Sequoia Capital also participated in this funding round.
As online lending becomes cheaper than traditional banks, exorbitantly expensive institutions like Western Union, and credit cards, fintech startups in this space are reaping the rewards, including notable IPOs from Lending Club and OnDeck. According to the Wall Street Journal‘s Yuliya Chernova, lending startups raised $1 billion in the first half of 2015, more than they raised in all of 2014.
— Yuliya Chernova (@ychernova) July 29, 2015
How Behalf works
Behalf, an Israeli company formerly called Zazma that co-founders Benjy Feinberg, Shai Feinberg, and Jeremy Esekow launched in 2011 (and is now headquartered in New York City), provides a simple four-question questionnaire to determine whether or not you are a reliable candidate for one of their small business loans. Within minutes, you will see whether or not you have been approved for Behalf credit to pay off any vendor. About 40% of applicants are approved for Behalf vendor credit loans on their first try.
Depending on one’s needs and past credit score, Behalf credit loans can be provided for up to $50,000 worth of inventory and the company will pay the vendors directly for you. The rates are merely 1-3% of the total financing: one must pay $10-$30 a month for every $1,000 Behalf lends.
While Behalf deals with a specific cash flow problem in an innovative, cutting out the middle man kind of way, there are others that provide similarly affordable and easy-to-use cash flow solutions for small- and medium-sized businesses in general, not just ones that interface with vendors. Fundbox, another fintech startup from Israel that has offices in NYC, provides general SMB loans to verified companies within an hour at a slightly more favorable starting rate, 0.7 percent. However, Fundbox’s largest loans are up to $15,000 for first-time customers, though repeat larger clients can access more financing than this, and its Series B round in March was $40 million, albeit in direct funds.
Israeli BlueVine, which is younger and less invested than both Fundbox and Behalf, expanded its credit lines to up to $100,000. Based out of Palo Alto, BlueVine could be a serious force in the coming years.
Still, Behalf seems well placed – especially with $119 million in new financing.