Israeli fintech company Fundbox has announced the completion of a $100 million Series D financing round at a company valuation of $1.1 billion, after money, led by Healthcare of Ontario Pension Plan (HOOPP), with existing and new investors.
Most fintech companies thrived due to the Covid crisis, as more people wanted to complete transactions online, Fundbox, which extends B2B credit to small and medium sized businesses, was hit hard by the pandemic, and lay off 15% of its work force early in the crisis.
The latest financing round only represents a modest rise in Fundbox's valuation since its last financing round in 2019-2020, which according to PitchBook was at a valuation of $1 billion. However, Fundbox insists that its last financing round was at a company valuation of $700 million, after money, and that only now has it officially become a unicorn.
Fundbox was founded in 2013 by Eyal Shinar, Yuval Ariav and Tomer Michaeli. Shinar, a former VP of Battery Ventures investment firm, served as Fundbox's CEO until June 2020 when he became chairman and handed over the reins as CEO to Prashant Fuloria, who had previously been the company's COO. Fuloria is an Indian-born American who has previously worked for Google, Facebook and Yahoo!
Fundbox's first product was providing credit to small businesses against invoices for future payment - a bridging loan against invoices to be paid after 60 and 90 days. Over the time the company has expanded its product offerings to provide credit lines and other loans to businesses of up to $100,000. The loans target people unable to obtain bank credit due to an insufficient financial history, for example. Private loan providers are able to extend credit much more quickly than banks and Fundbox is able to transfer money into the lenders account within a day.
Fundbox reports that it has exceeded a $100 million annual revenue run rate (ARR) with new customer acquisition growth of over 200% thus far this year. The company also said that it has surpassed $2.5 billion in transaction volume and connected with over 325,000 small and medium-sized businesses in the US.
Fuloria said that is not yet profitable as a company. "We are profitable at the level of individual customers and when we stopped expenditure on buying new customers last year, we reached a positive cash flow."
He describes Fundbox's valuation as balanced. "This valuation leaves room for increase and growth. I know that there are companies with five times our revenue that receive the value of a unicorn but in their place I wouldn't feel certain that the direction of the markets can change. We are strong. We weren't destroyed in 2020 and most important is where we will be in five or ten years."
Fundbox operates in a large market with 30 million small and medium sized businesses in the US but must compete with tough competition in the credit sector, including the likes of Square and PayPal. Fundbox's workforce has risen from 250 in 2019 to 310 today, of whom 150 employees are in Israel.
Fuloria added, "Fundbox is primed for continued growth as we approach a once-in-a-decade opportunity to drive the recovery and expansion of the small business economy. The addition of Flex Pay to our product offerings is critical as small business owners look to utilize buy now, pay later solutions for business. We remain committed to leveraging our superior AI, data-native approach, and small business insights to solve working capital needs and power the resurgence of the small business economy."
Published by Globes, Israel business news - en.globes.co.il - on November 30, 2021.
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