This financial tech startup just raised funding from the likes of Jeff Bezos and Ashton Kutcher – their ability to help small businesses is a large part of why
Fundbox, a San Francisco and Tel Aviv-based startup that can assess businesses’ credit risk online within an hour and helps credit worthy businesses automatically pay invoices when they experience cash flow problems, announced on Thursday that they have raised $50 million in an equity funding round. This company is one of the fastest startups from Israel in the last few years. Since Co-Founders Eyal Shinar, Tomer Michaeli, and Yuval Ariav launched Fundbox in 2012, they have raised $107.5 million in total funding, including this latest round. Its previous funding round, a $40 million Series B, only occurred six months ago.
Why? Their machine learning solution makes assessing credit risk much cheaper and easier than the capital-heavy work of loan officers, and their small loans to businesses experiencing cash flow problems are fast, easy-to-use, and at extremely good rates: They only charge between 0.7-3.0% for each requested payment.
A whole bunch of fancy names appear as new investors for this round, which is intended to support accelerated growth, new hires, and product development. With participation from Bezos Expeditions, the personal investment arm of Jeff Bezos, Spark Capital Growth led the round. Ashton Kutcher and Guy Oseary’s Sound Ventures along with Entrée Capital also joined as first-time investors, and existing investors Khosla Ventures, General Catalyst Partners, Shlomo Kramer, and Blumberg Capital participated in this equity round.
Beyond Fundbox‘s technology, they were probably also motivated by their growth numbers. As CEO Eyal Shinar noted to Geektime, “Fundbox has underwritten more than 15 million invoices while also completing its 7th consecutive quarter of at least 2x quarter-over-quarter revenue growth.”
How does Fundbox compare to Behalf, a similar Israeli company that raised $119M in equity and credit financing recently?
While Fundbox‘s solutions are impressive – including its newest product, Credit-as-a-Service, that enables a third-party to embed Fundbox directly into the workflow of a business’s software – it is not the only startup in the cheap cash flow automation sector. Behalf, which has raised a total of $129 million, not only assesses credit risk with a simple four-question questionnaire, it also provides small businesses up to $50,000 worth of inventory to pay back vendors. This is significantly more than the $15,000 maximum loans Fundbox allows for first-time customers.
When asked how Fundbox is different from Behalf, CEO Eyal Shinar had a detailed response for us. “Fundbox leverages deep data analytics, predictive modeling and engineering, enabling businesses to accelerate cash flow against their outstanding invoices. The Fundbox tool is embedded directly into the workflow of a business, through existing accounting and e-invoicing software, delivering instant advances of outstanding invoices with one-click.”
More specifically, he noted that, “Behalf is a line of credit if you want to purchase equipment, inventory, etc. Behalf works with select vendors to enable their customers to get up Net 15, 30 or 45-day terms.”
He added that Spark Capital Growth, the lead investor for Fundbox’s current round, was an early investor in Behalf, and that if they “chose to invest in Fundbox at this time … they would not have done if they felt the companies were similar.”
There is no denying that the small business online lending space is growing at a rapid clip. According to the Wall Street Journal, lending startups raised $1 billion in the first half of 2015, more than they raised in all of 2014.
Still, we think Fundbox is well positioned to rise to the top.