Like many Israeli startups, fintech company Fundbox also had to make a few adjustments following the global COVID crisis, when last week they laid off about 15% of their employees, while also cutting management’ salaries. However, they surprisingly announced last Tuesday, that the company was expanding its latest funding series with another investment totaled at $20 million, which is added to the $326 million that the company had already raised during its series C funding round.
Credit based risk-prediction system
Fundbox’s system is supposed to be a solution for the known issues with net-30 payment terms: On one side, there’s the buyer, who wants to enjoy convenient payment terms. However, on the other side, there is the seller, who wants to get paid for their services immediately, and is forced to deal with late payments and a sort of uncertainty regarding their economic future, which also prevents the seller from expanding and growing their business.
Fundbox enables the seller (B2B) to receive payment immediately upon invoice, while still giving flexible payment terms for the buyer, just like with credit cards. Among other things, the company is assisted by a pinpoint predictive system that knows how to quickly confirm payments and terms. The company has nearly 200,000 clients in the U.S., who pay a service fee.
Fundbox was founded in 2012 by Eyal Shinar, Tomer Michaeli, and Yuval Ariav, and employs about 200 people at their offices in San Francisco, Dallas, and at their R&D department in Israel. The latest investment coming from MUFG, Mitsubishi’s investment group, brings the company’s totaled funding to $303 million, of them, $196 million in cash and a credit line of $150 million from the last funding round.
The company sees no issue with laying off 15% of their employees, only to raise another $20 million a moment later. In response to Geektime’s inquiry, Fundbox said: “The COVID-19 crisis has brought an unexpected and unprecedented financial crisis, which first and foremost harms small and medium-sized businesses. The company was forced to react immediately under uncertain terms in order to best prepare for the future to come. Therefore, the company decided that the most responsible course of action was to embark on a streamlining plan, from the perspective of the good of the company, its employees, and its investors. As part of the decision, 14 employees lost their jobs, while management salaries were cut. The laid-off employees received full benefits, while the company is doing all in its power to return them to the job market. After MUFG witnessed the company’s responsible conduct, as well as its continued activities in the midst of the crisis and wanted to express their trust in the company.”
